When it comes to long-term investing in ASX shares, I'm not sure there is an option better than Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). I'm all about investing for the long-term, which is why I've invested heavily in it and it's my largest holding.
This business is an investment conglomerate that has been listed for 120 years – it's one of the oldest companies in Australia.
I haven't held it for an extremely long time yet, but I'm planning to do so for a few different reasons. It ticks my objective boxes and I want to outline why it's a wonderful choice to own.
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Effective diversification
A vast majority of Australian investors would benefit from having diversification in their portfolios.
If we were to look at where household wealth is invested, I wouldn't be surprised if a large proportion was invested in residential property, ASX bank shares and ASX mining shares. That exposure may be direct or indirect.
So, I think it could be a smart move to invest in assets that give exposure to other sectors and can provide the same or better returns. I don't want to be diversified for the sake of it if its detrimental to my returns.
Instead, I want to own investments that I believe can produce strong returns, with a different set of risks.
Soul Patts is invested across a wide array of industries that management believes can provide good returns and defensive cash flow.
It's invested in areas like energy, communication services, consumer discretionary, credit, materials, financials, industrial property, agriculture, water rights, swimming schools and plenty more.
I think it's this defensive diversification that has helped the business outperform the ASX share market during declines.
Capital growth
One of the main reasons why I think the ASX share is such a compelling investment, and why I want to own it for the long-term, is because of how its portfolio develops over time.
Soul Patts makes long-term investments and those assets have a good likelihood of growing in value over time because of natural business growth. This helps drive the underlying value of Soul Patts up over time as well.
Additionally, Soul Patts regularly makes additional investments into expanding its portfolio and unlocking further growth.
Between the first half of FY23 and the first half of FY26, its net asset value (NAV) has returned an average of 11.1% per year (adjusted for dividends).
Over the last 25 years, Soul Patts has delivered an average total shareholder return (TSR) of 12.9%.
I expect the Soul Patts share price can rise in the coming years as its portfolio of businesses continues to grow profit, helping increase my wealth.
Dividend growth
One of the best reasons I like this ASX share is that the business gives great dividend income. I like owning Soul Patts shares in my portfolio so that I can benefit from the wealth effect of the steadily growing dividend.
Soul Patts has increased its regular annual dividend every year since 1998, which is the longest record on the ASX.
Dividend growth is not guaranteed, but I have a high level of confidence that it can increase its annual payout for the foreseeable future because of the growing business investments it has made.
Its latest announced dividend was the FY26 interim payout, which was hiked by 9.1% to 48 cents per share.
With a current grossed-up dividend yield of 3.5%, including franking credits. I think that's a solid starting dividend yield from the ASX share. If the business ever became cheaper, I'd be even more motivated to buy more of the ASX share.
