Washington H. Soul Pattinson and Co Ltd (ASX: SOL) shares are famous on the S&P/ASX 200 Index (ASX: XJO). Soul Patts is the only ASX 200 share that can tell investors that they have enjoyed 23 years of uninterrupted annual dividend pay rises. Yep, Soul Patts shares have come with an ever-rising dividend since the year 2000.
And yet, this ASX 200 investing house doesn't look like a dividend heavyweight at first glance. Right now, its shares have a trailing yield of 2.69% on the table. That's fine, but nothing that will catch the eye.
But today let's undertake an investigation into the power of a compounding dividend.
We'll start by going back five years. At the start of 2019, Soul Patts shares were asking $26.17 each. That's 23.7% away from the $32.37 those same shares are asking today.
Over 2019, Soul Patts would go on to fund two fully-franked dividend payments, as is the norm for the company. Those consisted of an interim dividend worth 24 cents per share and a final dividend worth 34 cents per share for a total of 58 cents per share.
Over the following years, Soul Patts kept to its habit of delivering annual dividend pay rises.
2020 saw the company fork out a total of 60 cents per share in dividend payments (despite the pandemic).
Then, in 2021, this was upped again to 62 cents.
2022 saw a huge increase in investor payouts, with a total of 72 cents per share doled out (as well as a special 15 cents per share dividend).
And that brings us to 2023. Last year, Soul Patts shares gave investors an interim dividend of 36 cents per share, in addition to a final dividend worth 51 cents per share. That's a grand total of 87 cents per share.
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How much are dividends from Soul Patts shares really worth?
So this streak of dividend hikes is obviously impressive. But how much exactly is it worth to Soul Patt investors? Well, let's assume that an investor picked up $10,000 worth of Soul Patts shares back at the beginning of 2019. At that share price of $26.17, this would have resulted in the acquisition of 382 shares, with some change left over.
Over 2019, this investor would have enjoyed a total of $221.56 in dividend income. That translates to a yield cost of around 2.22%.
But over 2020, that same investor would have bagged $226.20 in dividends.
By 2021, it would have been $236.84, and by 2022, $275.04 ($332.34 including the special dividend).
2023 would have yielded the same figure for our investor – $332.34.
As such, we can conclude that our investors' annual dividends have risen from $221.56 to $332.34 over a five-year period. That's a rise worth 50%.
What's more, it means that at the end of 2023, our investor is enjoying a yield-on-cost of 3.32% on their original investment, not the 2.22% they started with.
As a result, their 382 Soul Patts shares, which cost just under $10,000, would be worth $12,365.34 today. In addition, our investor has enjoyed a total of $1,349.38 in total dividend payments. That stretches their total gain to $3,714.62.
Not a bad return for five years.
