My latest investment was the S&P/ASX 200 Index (ASX: XJO) stock Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which I decided to purchase last week.
It's already one of the biggest positions in my portfolio, and I keep going back for more.
The investment conglomerate has been growing shareholder wealth for 120 years, and I think it's going to be a useful core position in my portfolio for the rest of my life.
I regularly write about how much I like this business, with its high level of diversification in the portfolio. It's invested in areas like building products, industrial property, telecommunications, resources, swimming schools, electrification, agriculture, credit/bonds and financial services.
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Why I continue buying this ASX 200 stock
The track record of this company is impressive – in the 20 years to 31 July 2024, it has returned an average of 11.7% per annum, beating the market by an average of 3% per annum during that period.
As a bonus, it continues growing its dividend, which I find appealing. The payout has risen every year since 2000. Investors can choose to reinvest their dividends or receive them as cash.
Remember, past performance is certainly not a guarantee of future performance.
I believe Soul Patts' current portfolio is well-suited to keep performing in the shorter term, whether the Australian economy enters a recession or starts recovering. Its defensive, cash-flow-producing assets are an excellent attribute of the company
However, the world is always changing. Businesses need to be able to adapt to continue to succeed. No one can truly know how the artificial intelligence (AI) theme will play out or what the next meaningful geopolitical event or any other 'macro' event will be.
I think the best attribute of this ASX 200 stock is that it has a very flexible investment mandate. It can invest in almost anything, any market capitalisation, listed or private equity, different asset classes (such as bonds), and even different countries.
Soul Patts started as a pharmacy business in the early 1900s, and it only recently divested its exposure to pharmacies when Australian Pharmaceutical Industries was acquired by Wesfarmers Ltd (ASX: WES). Soul Patts is an entirely different business.
The company's portfolio could look very different in 20 or 30 years, but Soul Patts has shown it's willing to adapt its portfolio to ensure its long-term success. Recent investments include electrification, agriculture and swimming schools. It operates like a family office, with a strategy that could ensure multi-generational success.
It may not perform like a high-flying ASX growth share, but its active investment choices and flexibility could help it remain a good ASX 200 stock for many years to come.
