The legendary investor Warren Buffett once famously said that his favourite length of time to own a share is forever. It’s a sentiment that this writer agrees wholeheartedly with. But the world is a complex and ever-changing place. Thus, it’s hard to really know for sure if a company has a place in one’s portfolio forever.
In 1992, for example, Blockbuster Video might have seemed like a buy-and-hold-forever kind of company. Fast forward to the late 2000s and it was becoming clear that Blockbuster’s future was looking increasingly bleak.
Even Buffett doesn’t quite put his money where his mouth is all of the time. He has been selling plenty of his shares in recent years, after all.
But in my opinion, Washington H. Soul Pattinson and Co Ltd (ASX: SOL) is about as close as you can get to a ‘forever ASX share’. Here are two reasons why:
Soul Patts has been succeeding for decades
Soul Patts has been around for longer than the ASX has. It can trace its roots back to the 19th century. Over the decades since, the company has slowly transformed into an investment house of sorts. It conservatively manages its capital for the long-term benefit of its shareholders, a process it is continually refining.
But it has done a pretty decent job of building a long-term track record of performance. In a company presentation in March, Soul Patts claimed that its shares had averaged a compounded annual return of 14.5% since 1981. Not too many companies can boast a record of that length and calibre. What’s more, Soul Patts has also given its investors an annual dividend increase every year since 2000.
An unusually diversified ASX share
Most ASX shares are inherently undiversified since they represent ownership of a single business. But Soul Patts is different. It owns large chunks of many other ASX shares within its investment portfolio. These include telco TPG Telecom Ltd (ASX: TPG), coal miner New Hope Corporation Limited (ASX: NHC), and construction materials company Brickworks Ltd (ASX: BKW). What’s more, it also owns a bevvy of unlisted assets too, which further diversifies its portfolio.
So Soul Patts is a diversified investment with a long, long track record of delivering outperformance and rising dividends. That’s why I don’t ever plan on selling this ASX dividend share.