There are very few businesses in Australia that are older than Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) (Soul Patts).
Businesses are not like our bodies or wine, they don't necessarily get better or worse with age. However, it does show that Soul Patts has excellent staying power.
Soul Patts is an investment conglomerate company that takes large long-term investment stakes in other businesses. I believe its this ability to change its holdings which has allowed Soul Patts to remain completely relevant all this time. It can change its investment direction in a day if it wanted to.
At the moment some of its biggest holdings include TPG Telecom Ltd (ASX: TPM) and Brickworks Limited (ASX: BKW).
So, is Soul Patts the best dividend stock?
The dividend yield
Any dividend investor is looking for a decent starting yield. Soul Patts currently has a grossed-up dividend yield of 3.9%.
That's definitely not the biggest yield around, but there's more to consider with the dividend than just the yield.
Dividend history
Soul Patts has increased its annual ordinary dividend every year since 2000. Only one other quality company has a dividend history like that on the ASX – Ramsay Health Care Limited (ASX: RHC).
Payout ratio
I think it's also important to be aware of the payout ratio. A company that's paying out 100% (or more) of its earnings is very likely to cut the dividend at some point, like Telstra Corporation Ltd (ASX: TLS) recently did.
In its recent half-year report Soul Patts said that its payout ratio would be 74.69% of its regular operating cash flows. There is some safety with its payout ratio.
Dividend growth
Soul Patts has increased its dividend at a decent rate. In its latest half-year result it increased its dividend by 4.5%. Over the past 15 years its dividend has increased by a CAGR of 9.4%.
Foolish takeaway
Soul Patts has outperformed the ASX index over the long-term. I believe it will continue to do well with its diversified approach and it is one of the shares most likely to continue increasing its dividend every year over the next decade.
