SOL share price in focus
Founded in 1903, Washington H. Soul Pattinson (WHSP) is an investment company with a diversified portfolio of assets across a range of industries and asset classes.
Some of SOL’s largest holdings include stakes in other well-known publicly listed companies such as TPG Telecom (ASX: TPG), New Hope Group (ASX: NHC) and a cross-shareholding in Brickworks (ASX: BKW).
SOL’s mission is to deliver superior returns to its shareholders by creating capital growth and steadily increasing dividends as a holding company. It’s the second-oldest publicly listed company on the ASX and has a strong track record of capital growth and dividends. In fact, it’s never missed a dividend payment since listing in 1903! It should be thought of as a family-run LIC, for the benefit of all shareholders (who are deeply aligned).
Since we consider Washington H Soul Pattinson & Company Ltd to be a blue chip stock, or a mature business, we like to look at things like return on invested capital (ROIC) and revenue growth as signs of sustainability. In FY24, Washington H Soul Pattinson & Company Ltd had an ROIC of 4.70% and revenue has compounded at -3.3% in recent years. If a mature business struggles to consistently hit 10% ROIC it could be a sign the business may not be investing its capital well. This is just a rule of thumb we follow.
HUB shares
HUB24 was founded in 2007 and has quickly become a leading player in the wealth management industry, providing software and management platforms that touch financial advice, superannuation, and investment management.
HUB24’s three main products are the platforms HUB24, Class, and myprosperity. HUB24 is made for financial advisers and their clients, providing access to a range of managed funds and investment products. Class is a leading software for self-managed super funds to manage portfolios, legal documentation, and compliance. myprosperity is a provider of client portals for accountants and advisers to provide an enhanced service and customer experience.
HUB24’s competitive advantage is in the quality of its service. In 2024 they’ve been awarded Overall Best Platform in the Adviser Ratings Financial Advice Landscape Report, and ranked first for Overall Satisfaction and Brand Image and Reputation in the 2024 Wealth Insights Platform Service Level Report.
SOL share price valuation
One way to have a ‘speedy read’ of where the SOL share price is could be to study something like dividend yield through time. Remember, the dividend yield is effectively the ‘cash flow’ to a shareholder, but it can fluctuate year-to-year or between payments. Currently, Washington H Soul Pattinson & Company Ltd shares have a dividend yield of around 2.72%, compared to its 5-year average of 2.44%. Put simply, SOL shares are trading above their historical average dividend yield. Be careful how you interpret this information though – it could mean that dividends are growing, or it could mean the share price is falling, or both. In the case of SOL, last year’s dividend was greater than the 3-year average, so the dividend has been growing.
Since HUB is more of a growth company than an established blue chip, a price-sales ratio might be a more appropriate assessment. The HUB share price currently trades at a price-sales ratio of 15.00x, which compares to its 5-year long-term average of 13.32x. So, its shares are trading higher than their historical average. However, a simple multiple like this should only be the start of your research. The Rask websites offer free online investing courses, created by analysts explaining things like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets! Just remember there are many different ways to value a share, like Hub24 Ltd.
