There are numerous potential picks retirees could make for their portfolio. I think Washington H. Soul Pattinson and Co Ltd (ASX: SOL) ticks many of the boxes older (and younger) Australians may be looking for. Soul Patts shares may not be very famous, but I think they should be.
The first thing to know is that the business has already displayed excellent longevity in that it's more than 120 years old and has been listed on the ASX for all those years.
It started as a pharmacy business, which is where the Soul Pattinson Chemist chain got its name. However, Soul Patts divested its stake in the chemist business a few years ago.
There are a few reasons why I think it's a wonderful pick for retirees, so let's get into those.
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Great diversification
Many of the largest ASX dividend shares we can invest in generate most/all of their earnings from a specific sector, such as banking, mining, telecommunications, and so on.
Soul Patts has built a very diversified portfolio after making numerous investments over the decades. Now it's invested in a number of different areas such as sizeable listed companies, 'real assets' (real estate, agriculture, water, and data centres), emerging companies, credit and private companies.
Some of the main sectors it has exposure to through its company investments include energy, communication services, mining, financials, industrials, retail, healthcare, building products, swimming schools, and electrification.
Soul Patts shares can give retirees a significant level of uncorrelated asset diversification, while also enabling the business to search far and wide (including internationally) for great investment opportunities.
As the years go by, I expect the Soul Patts portfolio will continue to modernise and become even more growth focused.
Incredible dividend record
I'm sure most retirees reading this want to know about the dividend, so let's talk about its incredible record.
Soul Patts has grown its regular annual payout every year for 28 years in a row. No other business on the ASX has the same track record of consistent dividend growth. I'm expecting the company to reach 30 years of consistent dividend growth and more.
Another fact worth knowing is that it has paid a dividend every single year of its existence, going back 120 years, including through the wars, pandemics, and recessions.
This business is very committed to paying dividends to shareholders.
It recently grew its HY26 interim dividend by 9.1% to 48 cents per share. It now has a grossed-up dividend yield of 3.8%, including franking credits.
If the ASX dividend share continues to generate cash flow from its own investments, I'd say shareholders have a great chance of seeing growth for the foreseeable future.
Long-term capital growth
Soul Patts is not just a dividend machine, but it is also growing its share price over time thanks to the increasing value of its portfolio.
The portfolio is growing organically as its business investments naturally grow in size as they deliver on their own plans.
Soul Patts is also able to make new buys with some of the investment cash flow from its portfolio that it retains (after paying for operating expenses and giving shareholders a larger dividend).
With its HY26 result, Soul Patts noted that in the past 25 years, it has delivered an average total shareholder return (that's capital growth plus dividends) of 12.9% per year, outperforming the total return of the S&P/ASX 200 Index (ASX: XJO) by 4.6% per year. Those returns show plenty of capital growth for investors.
I think this is one of the most effective investments retirees can buy for their portfolio for the long term.
