Looking at Washington H. Soul Pattinson and Co Ltd (ASX: SOL) shares today, and one might assume that there's nothing too special going on in the dividend department with this ASX 200 investing house. But it's worth discussing today that Soul Patts shares are trading with a dividend yield of 2.59%.
Now that's not terrible. But it doesn't look particularly compelling either, even if you consider that it always comes fully franked. After all, you can easily get a dividend yield above 5% from many of the ASX's biggest miners at present. Or 6% if you turn to the ASX banking sector right now.
Yet some investors are currently enjoying more than a 22% yield on their Soul Patts shares as we speak.
How is that possible, when this company is trading on a trailing yield of 2.59%?
Well, it's because those investors have held their shares for a very long time, and have reaped the rewards of holding one of the most prolific inocme payers on the ASX.
How are some investors banking a 22% yield on their Soul Patts shares?
Let me explain. Soul Patts is the only ASX share on our stock market that has a 23-year streak of annually raising its investor payouts. Yep, this company has increased its annual dividend every single year since 2000.
Back in 2000, Soul Patts paid out a total of 10.4 cents per share in dividend payments. Last year, that annual total had risen to 87 cents – an increase of just over 736% across 23 years.
At the beginning of the year 2000, Soul Patts shares were asking just $3.90 apiece. If an investor picked up some shares back then, they would have received a yield of 2.67% at the time. But if that investor held those shares in their portfolio ever since, then 2023's dividend payments would have netted them a yield on cost of 22.3%.
Of course, at the time, no one was to know that Soul Patts was about to embark on such a lucrative dividend spree over the coming decades. But for those who saw that the company had a strong management team and a well-thought-out roadmap for the company's growth, it might not be a surprise today.
Anyone who picked out Soul Patts back in 2000 for $3.90 a share would have also enjoyed a (coincidental) 763% capital gain from the company too – given those shares that were going for $3.90 in 2000 are now fetching $33.66 at the time of writing.
This all just goes to show how lucrative a rising dividend can be over a long period of time.
