Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), commonly known as Soul Patts, stands out as a premier choice for investors seeking reliable passive income. Despite a recent 15% dip in its share price, this venerable company remains a top pick for lifetime dividend shares, boasting over a century of uninterrupted dividend payments.
Founded over 120 years ago, Soul Patts has demonstrated remarkable resilience, consistently delivering dividends through world wars, economic downturns, and global health crises. This steadfast performance underscores its enduring appeal to investors.
Diversification: A Key Strength
One of the standout features of Soul Patts is its inherent diversification. Unlike many companies that require multiple investments to achieve a balanced portfolio, Soul Patts offers instant diversification through its extensive range of investments.
The company has stakes in various sectors, including telecommunications, resources, industrial properties, and healthcare, among others. Notable investments include TPG Telecom Ltd (ASX: TPG), New Hope Corporation Ltd (ASX: NHC), and Nexgen Energy (Canada) CDI (ASX: NXG).
This diversified approach allows Soul Patts the flexibility to invest in any sector or business size that promises favorable returns, ensuring a future-focused portfolio capable of adapting to market changes.
Consistent Dividend Growth
Soul Patts’ commitment to increasing its dividend payouts is a testament to its robust financial health and management’s confidence. The company has raised its dividends annually since 1998, marking the longest record of consecutive dividend increases on the ASX.
Since FY22, Soul Patts has increased its cash flow from investments per share by an average of 16.5% annually, while its dividend per share has grown at an average of 13.5%.
At present, Soul Patts offers a grossed-up dividend yield of nearly 4%, including franking credits, providing a solid foundation for income-focused investors.
Capital Growth and Resilience
While many ASX dividend shares may offer limited capital growth, Soul Patts excels in delivering both dividend and capital growth. The company’s pre-tax net asset value (NAV) per share has seen significant growth, averaging a 10.5% annual return since the Milton merger in FY22, outperforming the ASX share market by 1.6% per year.
Soul Patts’ strategic focus on defensive assets and diversification has fortified its portfolio against economic fluctuations, ensuring capital protection and performance throughout market cycles.
“Our portfolio is built to be resilient, protecting capital and outperforming through the economic cycle,” the company stated in a recent shareholder briefing.
Looking Ahead
As Soul Patts continues to navigate the complexities of the global market, its strategic flexibility and commitment to shareholder returns position it as a compelling choice for both capital growth and long-term dividends. With a proven track record and a diversified investment strategy, Soul Patts remains a stalwart in the ASX landscape.
Investors seeking a reliable income stream and potential for capital appreciation may find Soul Patts an attractive addition to their portfolios, especially in times of market volatility.
