3 reasons why Soul Patts (ASX:SOL) can be a good ASX dividend share

Soul Patts could be a solid option for dividends over the long-term.

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A row a pink piggy banks ranging in size from small to big, indicating ASX share price and dividends growth CBA bank dividend increase

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There are a few reasons why Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), also called Soul Patts, might be a solid choice as an ASX dividend share.

What is Soul Patts?

It’s a company that is a diversified investment conglomerate.

However, it started out as a pharmacy business on the stock exchange over a century ago in 1903.

Multiple generations of families have been involved in the running of the business. 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.

But there’s more to its potential as an ASX dividend share than just its longevity:

Diversified portfolio

Soul Patts has a number of different investments across a range of sectors.

Some of its biggest investments are the ones that it has held for the longest. The biggest two positions in the portfolio are telco TPG Telecom Ltd (ASX: TPG) and the diversified industrial property and building products business Brickworks Limited (ASX: BKW).

It’s also invested in a number of other ASX-listed businesses like New Hope Corporation Limited (ASX: NHC), Australian Pharmaceutical Industries Ltd (ASX: API), Pengana Capital Group Ltd (ASX: PCG), Pengana International Equities Ltd (ASX: PIA), Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI), 360 Capital REIT (ASX: TOT), Clover Corporation Limited (ASX: CLV), Tuas Ltd (ASX: TUA) and Commonwealth Bank of Australia (ASX: CBA).

The ASX dividend share is invested in a number of private businesses too. Some are sector plays like financial services, agriculture, retirement living and resources. Others are more specific private businesses like swimming schools and an electrical business called Ampcontrol.

A focus on dividends for shareholders

Soul Patts has the record of the longest run of annual dividend increases in a row on the ASX.

It has grown its dividend every year since 2000, meaning the record stretches back two decades.

Soul Patts also has another dividend record. It has paid its dividend every year since it listed in 1903. That record stretches back through the world wars, global recessions and two pandemics (Spanish Flu and COVID-19).

The ASX dividend share generates investment income from its portfolio of assets that pay dividends and distributions. After paying for its expenses, Soul Patts has been paying a slightly higher dividend and then retains the rest of the profit to re-invest for further opportunities.

The dividend yield

Soul Patts recently increased its interim dividend by 4% to 26 cents per share in the FY21 half-year result. That brought the rolling 12 months of dividends to $0.61 per share.

At the current Soul Patts share price, that means the trailing grossed-up dividend yield is 2.9%.

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Returns As of 15th February 2021

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Clover Corporation Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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