Choosing just one ASX share in order to obtain a stream of passive income over the next decade is, on the surface, a hard ask. After all, the world is a very unpredictable place. It's extremely difficult to anticipate how the economy, the political sphere or technology will look in one year's time, let alone ten.
But if I had to buy just one ASX passive income share to hold for ten years, I would know exactly which one it would be, and I wouldn't lose a wink of sleep over the choice.
It would be none other than investing house Washington H. Soul Pattinson and Co Ltd (ASX: SOL).
Out of many, one
I've written about 'Soul Patts' many times here at the Fool. But in the years I have held this ASX 200 stock, my faith in its quality (and passive income potential) hasn't diminished one bit.
Soul Patts isn't your typical ASX share. Instead of selling products or services, it instead functions similarly to a managed fund. This company owns and manages a portfolio of underlying assets on behalf of its shareholders, a task it has been doing for more than a century now.
At present, one division of this portfolio consists of several large stakes in a group of ASX shares, which include TPG Telecom Ltd (ASX: TPG), New Hope Corporation Ltd (ASX: NHC), and Brickworks Ltd (ASX: BKW).
However, Soul Patts also operates a diversified portfolio of smaller stakes in a wide range of blue-chip ASX shares. It acquired this portfolio by acquiring the old Milton Corporation a few years ago. This portfolio contains everything from Telstra Group Ltd (ASX: TLS) and BHP Group Ltd (ASX: BHP) to Coles Group Ltd (ASX: COL) and Commonwealth Bank of Australia (ASX: CBA).
In addition to these primary portfolios, Soul Patts also runs a few other smaller portfolios, covering diverse asset classes like private equity, property, venture capital and private credit.
So why this company as a ten-year source of passive income?
Soul Patts: A passive income machine
Well, Soul Patts simply has the runs on the board. For one, its portfolio has consistently outperformed the broader Australian share market. Back in May, the company told investors that its shareholders have enjoyed a total return (growth plus passive dividend income) of 12% per annum over the 20 years to 30 April 2024.
That happily coincides with the passive income streak its investors have concurrently enjoyed. Soul Patts is the only stock on our share market that can boast of a 24-year streak of delivering a passive income pay rise every single year. Yep, Soul Patts has increased its annual dividend like clockwork every year since 2000.
It has done so at a compounded annual growth rate of 9.6% per annum. Today, this company's dividend yield doesn't look too impressive at 2.65% (fully franked). But by calculations, if the company keeps this growth rate up (which is not guaranteed, of course), an investor would enjoy a yield-on-cost of 6.62% after ten years. After 20, it would be 16.57%.
This is why, if I had only one punchcard today, I would pick this company for passive income for the next ten years and beyond.
