There are several reasons why Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), AKA Soul Patts, could be a good ASX share to own for the long-term.
What does Soul Patts do?
It was set up over a century ago as a pharmacy business. However, the company has since diversified to become a large investment conglomerate.
Not only is the business old, but it actually has very loyal and long-term serving employees.
More than 40 employees have worked for the company for over 50 years. Five generations of the Pattinson family have served the company, as have three generations of the Dixson, Spence, Rowe and Letters families.
But there’s much more to the business than simply long-term management.
Here are three reasons to consider owning Soul Patts:
The ASX share may be the most diversified business within the S&P/ASX 200 Index (ASX: XJO).
It owns a portfolio of different investments that are listed and unlisted.
The investment conglomerate doesn’t operate as just a retailer, bank or miner. It’s across a broad range of industries including telecommunications, building products, resources, agriculture, financial services and healthcare.
In terms of the actual listed investments it owns, these are some of the largest holdings: TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), Brickworks Limited (ASX: BKW), Pengana Capital Group Ltd (ASX: PCG), Bki Investment Co Ltd (ASX: BKI), Australian Pharmaceutical Industries Ltd (ASX: API) and New Hope Corporation Limited (ASX: NHC).
It also has investments in unlisted businesses like Aquatic Achievers (swimming schools), Ampcontrol (electrical products) and Round Oak Minerals (resources).
A diversified portfolio is meant to reduce risks.
Effective investment strategy
Soul Patts aims to have a diversified portfolio of uncorrelated investment across listed shares, private equity and venture capital, property, corporate loans and cash.
A flexible investment mandate allows Soul Patts to back companies at an early stage and grow with them over the long-term.
It aims to be counter cyclical and have a value-focused approach.
Soul Patts also says that it’s a trusted partner that actively assists its portfolio companies in accessing growth capital and undertaking strategic acquisitions.
At 31 January 2021, Soul Patts reported that its total shareholder returns (TSR) over the previous 10 years had been an average of 11.4% per annum, beating the All Ordinaries Accumulation Index by an average of 3.5% per annum.
Soul Patts has a long dividend growth record. It has increased its annual dividend every year since 2000. It has also increased its interim dividend for 23 years in a row.
The current dividend yield is low after a strong run of the Soul Patts share price. The trailing grossed-up dividend yield is 2.4%.