Soul Patts shares had a lacklustre FY24. Here's why I can't wait to buy more

Like Buffett, I like to buy shares when they're not looking so hot…

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In the 2024 financial year that has just passed us by, ASX shares had an uncommonly good time. The shares of Washington H. Soul Pattinson and Co Ltd (ASX: SOL), or Soul Patts for short? Not so much.

Between 1 July 2023 and 30 June 2024, the S&P/ASX 200 Index (ASX: XJO) rose by a healthy 7.3%. Factoring in dividend returns, anyone who owned an ASX 200 index fund would have banked roughly 12% last financial year. Not bad for an index that typically returns 7-8% per annum.

But Soul Patts shares couldn't quite match that performance. This ASX 200 investing house started July 2023 going for $31.78 each. Last week, those same shares wrapped up FY24 at a price of $32.82.

Sure, that 3.27% gain over FY24 is better than a poke in the eye with a blunt stick. But it falls far short of being a market-matching (let alone beating) investment – a typical criterion we use for assessing the quality of ASX shares as investments.

Soul Patts' dividends do narrow that gap a little. The company forked out 91 cents per share in fully-franked dividends last financial year. At the company's starting FY24 price, that adds a yield worth another 2.86% to Soul Patts' FY24 total return.

Even so, we can conclude that FY24 was a lacklustre one for Soul Patts shares and their owners.

As an owner myself, this doesn't bother me though. In fact, I think it's a great opportunity to pick up some more.

Buying Soul Patts shares when they're 'marked down'

Why? Well, the legendary Warren Buffett once said, "Whether we're talking about socks or stocks, I like buying quality merchandise when it is marked down".

Soul Patts is a company that usually delivers market-beating returns, not market-trailing ones. Back in May, the company affirmed that its shares had averaged a total return of 12% per annum (share price growth plus dividends) over the 20 years to 30 April 2024. That beat the ASX market by 3.3% per annum on average.

But not this year. So, by definition, that makes Soul Patts' stock 'marked down', as Buffett would say.

Say Soul Patts blew the lights out with a 20% rise in FY24. If that were the case, I wouldn't be in a rush to buy more shares today. However, as the company had a lacklustre year, it is now high on my buy list for FY25.

If the company sticks to its historical average and delivers a 12% return over the coming 12 months (which I think is very possible, but not guaranteed), I'll be glad to have bought shares.

Motley Fool contributor Sebastian Bowen has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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