Soul Patts share price in focus as dividend hiked 24%

The investment house saw a 16% jump in its net asset value last half.

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Key points
  • The Washington H Soul Pattinson and Co share price could be in for a big day on Thursday
  • The ASX 200 investing house posted its earnings for the six months ended 31 January this morning
  • It detailed a 36 cent per share dividend and a $1.1 billion improvement in its statutory profit

The share price of S&P/ASX 200 Index (ASX: XJO) giant Washington H Soul Pattinson and Co Ltd (ASX: SOL) is in focus after the company posted its first-half earnings this morning.

Stock in the $10 billion investment house last traded at $28.54.

Woman looking at her smartphone and analysing share price.

Image source: Getty Images

Soul Patts share price on watch as dividend bolstered 24%

Here are the key takeaways from the six months ended 31 January:

  • $475.7 million of regular profit – up 38.4% on that of the prior comparable period
  • $453 million of statutory profit – up from the pcp's $673.6 million loss
  • $290.5 million of revenue from continuing operations – a 74% fall
  • Net asset value came to $10.5 billion – a 16% improvement
  • $246.5 million of net cash flows from investments – a 35% jump on the pcp's
  • 36 cent per share fully franked final interim dividend declared – up 24.1% year-on-year

The historic investment house noted its net asset value's gain outperformed that of the All Ordinaries Index (ASX: XAO) by 10.2% over the year ended January.

Its strategic portfolio investments drove such growth, helped by high commodity prices and contributions from Brickworks Limited (ASX: BKW), Apex Healthcare, and New Hope Corporation Limited (ASX: NHC).

The company ended the period with $597.3 million of cash – a 257.7% improvement – with an average current yield of 4.2% per annum.

What else happened last half?

Soul Patts underwent $1.3 billion of transaction activity last half as it reduced exposure to cyclical and growth shares amid soaring inflation.

Much of the resulting cash was invested into its structured yield portfolio, which brought $18.8 million of cash flow.

Meanwhile, its private equity portfolio doubled down on agricultural and real estate assets, deploying $152.8 million into the space.

What did management say?

Soul Patts CEO and managing director Todd Barlow commented on the results that could drive the company's share price today, saying:

The portfolio is defensively positioned, we are holding a material cash position, and our new investments target attractive, risk-adjusted returns.

In a higher rate, inflationary environment, we are seeking greater exposure to real assets given the potential to offset inflation through income and growth.

What's next?

The ASX 200 giant didn't provide any earnings guidance today. Though, it appears confident in its strong liquidity position amid economic volatility, with chair Rob Millner saying:

Our company is equipped to navigate an unpredictable market with significantly more cash reserves to invest in the best opportunities.

Soul Patts share price outperforms the ASX 200

The Soul Patts share price has bested the ASX 200 over recent months.

The stock has posted a 5% gain so far this year. It's also risen 7% since this time last year.

That's compared to the index's 1% year to date rise and its 5% fall over the last 12 months.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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