There are many hundreds of businesses to choose on the ASX, but I think Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is my favourite one of them all.
It's an investment company that has been operating for over a century. According to Soul Patts, 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, that isn't the only reason why I love owning Soul Patts shares:
Very reliable dividend
Soul Patts has a paid a dividend every year in its existence, including through recessions and wars. That level of reliability can allow you sleep very easily at night.
In more recent times, the annual ordinary dividend has grown every year since 2000. It's great knowing that the next year of dividends will be higher than this year's.
Diversification strategy
A key reason for Soul Patts' longevity has been the fact that it takes large investment takes in businesses that deliver strong cashflow and are long-term opportunities.
As the years go by Soul Patts can adjust its holdings as it sees fit, which should allow it to weather any disruptions to its current major investments in TPG Telecom Ltd (ASX: TPM), Brickworks Limited (ASX: BKW) and New Hope Corporation Limited (ASX: NHC).
Soul Patts continues to invest for the long-term with its newest investments and is currently building up its financials portfolio as a way to benefit from the growing superannuation pool.
Outperformance
In its recent half-year report Soul Patts outlined that it has delivered better returns compared to the All Ordinaries Accumulation Index over the long-term. Over the past three years its total shareholder returns have been better by an average of 8.2% per annum and over the past 15 years it has done better by an average of 5.4% per annum.
Past performance is not a guarantee of future returns, but it speaks highly of Soul Patts' previous capital allocation, which may be the best way to judge how capable management have been (or not).
Foolish takeaway
Soul Patts is currently trading with a grossed-up dividend yield of 2.9%. This is a pretty low yield compared to the historical yield Soul Patts has traded at, I'd prefer to buy shares with a grossed-up yield of 3% or more.
