Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) (Soul Patts) shares jumped after the company announced its FY26 result. It rose 6.2% on the day.
I'm not about to say that it's better value than it was before, but investors learned a number of things about the business from the report that make me think it's even more attractive.
We already know it's a leading investment conglomerate that has been operating for more than 120 years.
For me, there are three appealing takeaways.
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Cash and fixed income
The business has made a number of asset sales in recent times, which has led to cash becoming 20% of the portfolio. That's quite a large position, but it's a deliberate choice by the company.
In June 2026, it divested $1.9 billion of industrial property following a process activated by the Brickworks merger and pre-existing rights held by Goodman Group (ASX: GMG). Soul Patts has put that $1.9 billion into fixed income.
With higher interest rates, the company can now generate a solid return from its new fixed income division. This can be used to actively manage its liquidity, capital flexibility and risk.
Soul Patts revealed that of its fixed income investments, 69% is invested in global low duration and short-term instruments, while 31% is invested in Australian low duration, short-term instruments and cash. The investments have an average credit rating of AA, which is high-quality.
International investments
Soul Patts has long focused on ASX shares and Australian businesses, but that appears to be starting to change.
There are a wide range of opportunities overseas in different sectors and asset classes, so Soul Patts is looking to partner with high-quality partners to find opportunities.
It outlined that it's building opportunities in multiple divisions.
In 'private companies', it has a total of 15 investments, with four offshore co-investments worth $152.1 million (or 6.7% of the net asset value (NAV) of the segment). It's also invested in three offshore funds for a total of $105.4 million. Offshore commitments total $577 million across nine relationships, with six added during FY26. It's targeting mid-market fund sizes of between US$500 million to US$3 billion, where deal flow is bilateral and leverage is lower.
In credit, its credit book includes 10 offshore fund investments with specialist global managers (22% of NAV). It made five new offshore fund investments during FY26. It noted offshore total commitments of $1.5 billion, including a further eight offshore credit fund allocations of $406 million approved in FY26 and committed in FY27.
In 'emerging companies' it said it's building offshore exposure through fund and co-investments with global partners across North America, the UK and the Asia Pacific.
In 'real assets' it made its first international real assets commitment of $28 million to a US energy transition manager, reinforcing its exposure to long-term structural themes such as compute demand and electrification.
It's fascinating to see the business make such a strong pivot to international investments with external fund managers. It'll be interesting to see how much this grows as part of Soul Patts' portfolio and what the net returns are.
If the investment team think this is the right move, it'll probably work out well, the world can offer a lot more opportunities than Australia alone. Plus, using other managers is scalable activity for the company.
Dividend payout ratio is reducing
Owners of Soul Patts shares will love to know that the business decided to invest its annual dividend again. That means it has now increased its annual dividend for 28 years in a row.
The payout has been funded by the net cash flow from investments (NCFI). Soul Patts' NCFI has grown at a faster pace than the dividend, so the dividend payout ratio has been reducing and the dividend has become more sustainable.
The NCFI per share grew by 7.9% in FY26, while the annual dividend per share was hiked by 7.8%. NCFI benefited from a larger average credit book and increased distributions from cash generating businesses in the private companies asset class.
Owners of Soul Patts shares have seen their dividend grow at a compound annual growth rate (CAGR) of 12.4% over the past five years, compared to NCFI per share growth of 15% over the last five years.
The lower the dividend payout ratio becomes, the more sustainable the dividend is and the more the ASX share can invest for more growth.
