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Why I think that Soul Patts is the best long-term ASX share

I think that ASX share Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is the best long-term idea that you can buy idea on the ASX. For ease, it’s also called Soul Patts.

When I say ‘long-term’, I’m not talking about a year or two. I mean it’s an investment you could hold onto for at least two decades and do well with.

Overview of Soul Patts

It’s an investment conglomerate that has been operating since 1903. It’s actually one of the oldest businesses on the ASX.

The company started off as a pharmacy business after two different families merged their pharmacy businesses together. There are some employees who been working for a long time for Soul Patts.

More than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families.


I think one of the most important reasons to like Soul Patts is its diversification. It may have started off as a pharmacy business, but it’s now a diversified conglomerate. It’s invested in both listed and unlisted businesses which makes it somewhat similar to Warren Buffett’s Berkshire Hathaway.

It’s a large shareholder of telco TPG Telecom Ltd (ASX: TPM), resources business New Hope Corporation Limited (ASX: NHC), diversified property business Brickworks Limited (ASX: BKW), pharmacy company Australian Pharmaceutical Industries Ltd (ASX: API) and listed investment company (LIC) Bki Investment Co Ltd (ASX: BKI).

Some of the unlisted businesses Soul Patts is invested in are: electrical supplier Ampcontrol, resources subsidiary Round Oak, agriculture and swimming schools.

Diversification is a key factor for liking this ASX share. It’s invested across numerous industries, so there’s less risk if one investment does badly.

I think a broad investment mandate is attractive. It means that the management team can look almost anywhere to find the next opportunity.

This ability to change the asset base over time means you may never need to sell your Soul Patts shares. It’s helpful for your wealth if you don’t have to trigger a capital gains tax event and potentially pay over a material portion of the gains over to the ATO.

Solid long-term returns

Management are long-term focused with their investing. Management think many years ahead when making an investment. The fact that Soul Patts is thinking long-term can give us confidence to invest in the ASX share itself for the long-term.

Its strategy has clearly paid off over the decades. Over 20 years to 31 January 2020, the Soul Patts total shareholder return was 13.2% per annum, outperforming the All Ordinaries Accumulation Index by 4.6% per annum.

The new investments that Soul Patts is making could continue this solid performance. It is planning on expanding into regional data centres. I think this could be a very smart move. It could do particularly well if the work-from-home trend is a permanent change for some workers.

Soul Patts dividend

If consistent dividend growth is a priority for you then this ASX share is probably the best in Australia.

It has grown its dividend every year since 2000. I think that’s a really impressive record considering it includes the GFC period and Soul Patts also plans to pay an increased dividend later this year.

The ASX share has actually paid a dividend every year in its existence going back to 1903. This includes the though times of the Spanish Flu and the world wars.

It currently has a grossed-up dividend yield of 4.4%. I think that’s solid in today’s low interest world. 

Foolish takeaway

There are several great reasons to like Soul Patts. It’s the largest position in my portfolio and I plan to hold it in my portfolio forever. I’d be happy to buy more at the current share price.  

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Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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