Washington H. Soul Pattinson and Co Ltd (ASX: SOL), or Soul Pattinson, is one of the leading ASX dividend shares.
It has already displayed longevity. The company has been listed on the ASX since 1903. It has survived through world wars, global pandemics, financial crashes and so on.
But that's old history.
These are three reasons why the company is a very useful ASX dividend share:
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Diversified portfolio
Soul Pattinson first started as a pharmacy business.
But now it's a very diversified investment house. That means it operates by predominantly by investing in other businesses.
It has a portfolio of large and smaller ASX shares.
Some of the biggest holdings are TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Pengana Capital Group Ltd (ASX: PCG), Tuas Ltd (ASX: TUA), Pengana International Equities Ltd (ASX: PIA), Bank of Queensland Limited (ASX: BOQ), Bki Investment Co Ltd (ASX: BKI), Commonwealth Bank of Australia (ASX: CBA) and Bailador Technology Investments Ltd (ASX: BTI). There are many more.
The company also has a growing portfolio of unlisted and non-ASX shares. Examples of that include the electrical parts business Ampcontrol, Apex Healthcare, financial services, agriculture, swimming schools, resources and luxury retirement living.
Reliable cashflow funds dividends
With a contrarian mindset, Soul Pattinson has designed its portfolio to be defensive. The ASX dividend share says that its portfolio provides "reliable cash through market cycles which serves to protect downside in market corrections."
Many of the ASX dividend share's investments pay an annual dividend or distribution to shareholders.
Each year, Soul Pattinson receives all of that cash flow. It pays for its operating expenses and then it pays a large portion of that cash flow out as a dividend to investors. In FY21, it decided to pay 82.3% of its regular operating cash flows as a dividend.
With the bit of retained cash flow, the business invests in more opportunities. The company has a goal of paying steady and growing dividends.
Soul Pattinson has managed to grow its dividend every year since 2000. It has actually paid a dividend every year since it was listed in 1903.
Dividend yield
Soul Pattinson doesn't have the biggest dividend yield on the ASX. But it does offer a payout that is substantially more than what people can get from a bank savings account.
Based on the trailing dividends, Soul Pattinson has a grossed-up dividend yield of 3.4%.
