Some investors buy ASX shares in search of the best growth opportunities. Others buy stocks in search of a meaningful and reliable source of tax-friendly dividend income.
Both are noble pursuits. And there are many ASX shares out there that tick one box or the other.
Growth investors might look to stocks like Pro Medicus Ltd (ASX: PME) or TechnologyOne Ltd (ASX: TNE). Meanwhile, dividend seekers might choose to buy shares of Telstra Group Ltd (ASX: TLS) or Westpac Banking Corp (ASX: WBC) for those fat, fully franked dividends.
But shares that offer the prospect of both above-market growth and rewarding dividend income? Those are few and far between. Yet I think I've found one. Not just one, but perhaps the best growth and income share on the ASX. It's none other than Washington H. Soul Pattinson and Co Ltd (ASX: SOL). Washington H. Soul Pattinson and Co, or Soul Patts for short, is a company I've written about many times. It happens to be one of my favourite investments, and a share that I personally own (and have profited from for many years).
Image source: Getty Images
An ASX growth stock?
This company is a bit of a unique one on the ASX. Instead of producing goods or services, Soul Patts owns a portfolio of underlying investments which it manages on behalf of its shareholders.
This portfolio is massive in scope and scale. It is also highly diversified, ranging from large stakes in a small number of other ASX shares, small stakes in a large number of ASX shares, private credit investments, property, venture capital and more.
This is where Soul Patts can generate its growth. The company has a long track record that proves it is quite good at this. As of 31 January, Soul Patts has reportedly returned an average of 12.9% per annum (share price growth plus dividends) over 25 years. That beats the broader market by 4.6% per annum, making Soul Patts a bona fide growth stock in my view.
And a dividend share?
But, as we just touched on, part of that return came from the dividends Soul Patts has paid out over the period. When it comes to dividend income, this company finds few rivals on the ASX. For one, it boasts the best dividend growth streak on the Australian market.
Soul Patts shares have delivered an annual dividend increase every single year since 1998. Over the past five years, the company has been able to grow its dividends at an average rate of 11.9% per annum. That's significantly higher than the rate of inflation. Soul Patts' dividends typically come with full franking credits to boot.
So as you can see, Soul Patts is an ASX share with a lot to offer both growth and income investors. That makes it a perfect choice for any ASX investor, at least in my view.
