Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) (Soul Patts) could be one of the best ASX dividend shares to consider for income investors.
The business is actually one of the oldest on the ASX. It has been listed since 1903. That means it has survived through various events like world war one, the Spanish Flu, the Great Depression, the second world war, the GFC and so on.
For a few different reasons, Soul Patts could be one or the leading ASX dividend shares:
Defensive and diversified portfolio of assets
One of the elements of a sustainable dividend is that the dividend payment is less than the cashflow or profit. If a business pays more than 100% of its profit then it makes it a bit harder to grow the business when there is no profit re-investment happening.
If the profit is consistent and reliable then Soul Patts can also be confident in its dividend being sustainably funded.
Soul Patts has a number of assets that are defensive or relatively uncorrelated to the performance of the broader Australian economy such as telecommunications, property, resources, agriculture, swimming schools and so on.
The ASX dividend share has a wide array of ASX shares in its portfolio including TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), Bki Investment Co Ltd (ASX: BKI), Pengana International Equities Ltd (ASX: PIA), Pengana Capital Group Ltd (ASX: PCG), New Hope Corporation Limited (ASX: NHC) and so on.
Commitment to growing dividends
If management tell investors about a goal that is a key objective for the business, then that suggests the company will make it a priority to try to attain that goal.
Soul Patts has regularly said that it's aiming to keep growing the dividend for shareholders.
The ASX dividend share has grown its dividend every year since 2000. It currently holds the record for consecutive annual dividend increases. It has also paid a dividend every year since listing in 1903, though not every year was growth.
Portfolio rejuvenation
One of the ways that Soul Patts has managed to stay relevant over the last century is the ongoing portfolio investments and adjustments that the investment conglomerate makes.
The business has regularly changed its investments to what it thinks are long-term opportunities.
For example, it recently divested its long-term holding of Australian Pharmaceutical Industries Ltd (ASX: API) and also bought the old listed investment company (LIC) Milton to increase its financial fire-power.
The ASX dividend share is now looking at a number of areas to invest including international shares, private equity, structured yield, emerging companies, health and ageing, the energy transition, agriculture, financial services and education.
Is the Soul Patts share price good value?
The broker Morgans currently rates the investment conglomerate as a hold, though the price target is $36.78.
Based on the Morgans' estimates for FY23, Soul Patts is valued at 31x FY23's estimated earnings.
