Finding an ASX share to invest in that provides market diversification, a proven track record for growth, and a healthy share dividend is a very difficult task.
An ASX 100 share that passes all these tests with ease is Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).
Secret to success: Diversification and a conservative investment style
Washington H. Soul Pattinson or 'Soul Patts' has consistently maintained its conservative, value-focused strategy of investing in a diverse range of businesses for many decades.
The company's diversification comes from its investment in a wide range of industries, ranging from pharmacies and telecommunications, to mining and building products.
In slowing economies, Soul Patts has a proven track record of snapping up stakes in lucrative investment opportunities at attractive prices, and then re-positioning them as part of its overall portfolio with a long-term outlook in mind.
Soul Patts now owns just over 40% of Brickworks Limited (ASX: BKW), around 25% of TPG Telecom Ltd (ASX: TPM) and more than 50% of New Hope Corporation Limited (ASX: NHC).
Other investments include commercial property investments, and asset managers including BKI Investment Company Limited (ASX: BKI) and healthcare players such as Australian Pharmaceutical Industries (ASX: API).
This diversification also makes it an excellent defensive share investment, providing a good layer of protection to any market volatility.
A highly commendable track record
Soul Patts has been listed on the ASX for over a century and has paid a dividend every year in that time. It currently has a market capitalisation of $5.27 billion and has a reasonably attractive price-to-earnings ratio of 17.8. It also has a great long-term track record of outperforming the ASX index.
While it isn't the type of investment that is expected to see high capital gains over the short term, it has continued to display a slow but steady increase in capital value over the past decade and is currently providing shareholders with very healthy dividend of 2.63% (fully franked). Soul Patts shares are currently trading at $22.02.
In fact, Soul Patts has achieved the remarkable feat of increasing its dividend every year since 2000.
Foolish takeaway
Soul Patts has a strong and highly capable and stable management team in place and a very conservative balance sheet. Rather than being burdened with too much debt, it keeps significant cash on its balance sheets, which places it in a great position to grab any great investment opportunities if they suddenly arise.
It is very rare to find a company capable of this type of strategy.
With a proven strategy in place, investors can feel fairly confident that Soul Patts shares are very well placed to continue to outperform the ASX index.
However, there is no certainty in investing, and any material change to the senior management's investment strategy with any of its key holdings could impact its ability to keep executing its strategy.
