Washington H. Soul Pattinson & Co. Ltd (ASX: SOL) is a company that is nearly as old of my grandparents (sorry Nonno and Nonna!).
Founded in 1872 by chemist Caleb Soul and his son Washington (what a name!) their chain of chemist soon merged with a competitor. This was obviously before the ACCC and competitive advantage laws were introduced. Appearing on the ASX in 1903, WHSP is the second oldest company listed with Australian business behemoth BHP Group Ltd (ASX: BHP) taking first place.
The cough medicine and vitamins have long past with WHSP morphing into an investment giant with positions in companies ranging from retail, building materials and telecommunications. Does that sound similar to a certain conglomerate based in Nebraska?
Why I Bought WHSP Shares
I recently took a position in WHSP due to the commitment of growing its fully franked dividend stream. But don’t take my word for it, I recently came across this quote directly from their 2015 annual report:
“…our objective is to hold a diversified portfolio of assets which generate a growing income stream for distribution to shareholders in the form of increasing fully franked dividends.’
The investment thesis used by WHSP has seen it hold a concentrated portfolio for a long time. Another advantage is that shareholders gain access to the capital management strategies implemented by WHSP – this allows the cash flow (dividends from their investments) to be reinvested into other holdings or returned to shareholders.
As discussed, dividends are why I’m in love with WHSP. A lot of companies talk a big game in this respect, but very few can back it up. Thankfully WHSP has an amazing track record of looking after its shareholders in the best possible way.
Risks
In all my articles I try to provide a balanced view, mixing my bull cases with a sprinkling of a bear. However, I’m struggling to find a bear case for WHSP.
The only substantial risk I can find is that one of their holdings, such as TPG Telecom Ltd (ASX: TPM) or New Hope Group (ASX: NHC) suffers a major turn. Any negative result brought about by these positions will impact the overall share price and dividend strategy of this great company.
Conclusion
In my opinion, WHSP is one of the best stocks on the ASX and the market darling that you can put in the bottom drawer and hold for many years.
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At the time of writing, Anthony owns shares of Washington H. Soul Pattinson & Co. Ltd.
