Washington H. Soul Pattinson and Co Ltd (ASX: SOL), or Soul Patts, stock is a very compelling option for building a second income through dividends.
There's only so much we can work each year, and that means there's an upper limit on how much money we can earn.
But, there is a way to boost how much cash flow our bank experiences – invest in great, dividend-paying businesses like Soul Patts.
If someone is trying to build a second income, I'd focus on businesses with a strong track record of growing their dividend payouts. I'd want to feel as confident in the dividend income as I am about my next work payment coming through.
Soul Patts is my number one pick for reliable dividend income, so I think it'd work as a great pick for a second income for a few reasons.
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Resilient and growing dividends
Dividend payments are not guaranteed of course, but Soul Patts has the best track record of making payments to shareholders on the ASX.
Impressively, owners of Soul Patts stock have seen the dividend per share payment increase every year since 1998. That's more than a quarter of a century of continuous dividend growth!
Past dividend growth is not necessarily a reliable indicator of future dividend growth. On 24 September 2026, the business reported its FY26 result, which showed that the business hiked its annual dividend per share by 7.8%. That growth rate is well ahead of inflation right now.
According to the ABS, the inflation rate for the 12 months to September 2026 was 4.3%, up from 4% in the 12 months to August 2026.
Over the five years to FY26, the business grew its annual dividend at a compound annual growth rate (CAGR) of 12.4% compared to the S&P/ASX 200 Index (ASX: XJO), which has only grown dividends at a compound rate of 1.1% per year over the prior five years.
Soul Patts' dividend has grown through the dotcom bust in 1999, the GFC, COVID-19, and the inflation period of recent years. Additionally, the business has paid a dividend every year in its listed existence, which goes back more than 120 years.
How has it managed this? It's the growing cash flow from its portfolio of assets.
Diversified portfolio
Soul Patts operates as a diversified investment conglomerate. In other words, it's not just one business like a telco, supermarket, or bank.
It's invested across a variety of assets from different sectors including energy, telecommunications, financial services, building products, industrial property, retirement living, swimming schools, agriculture, credit, fixed income, and plenty more.
With this portfolio approach, the investment is able to provide investors wanting a second income with an instantly diversified portfolio, lowering risks and allowing it to search far and wide for opportunities.
Soul Patts pays for its dividends from the cash flow its portfolio generates, paying out a majority and keeping a minority for future investments. Those investments can grow organically themselves and it can invest retained cash into future opportunities.
Unlock $5,000 of a second income
Soul Patts paid an annual dividend per share of $1.11 in FY26. It would take 4,505 Soul Patts shares to unlock $5,000 annually at that level of dividends. But, if we're including the franking credits as part of the dividend income, it would only take 3,154 Soul Patts shares.
I don't have that many Soul Patts shares, but I'd love to, given how regularly the company increases its payout and how reliable it has been.
