Why I bought more of this ASX 200 stock

I'm optimistic about the future of this business.

| More on:
Man smiling at a laptop because of a rising share price.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

My latest investment was the S&P/ASX 200 Index (ASX: XJO) stock Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), which I decided to purchase last week.

It's already one of the biggest positions in my portfolio, and I keep going back for more.

The investment conglomerate has been growing shareholder wealth for 120 years, and I think it's going to be a useful core position in my portfolio for the rest of my life.

I regularly write about how much I like this business, with its high level of diversification in the portfolio. It's invested in areas like building products, industrial property, telecommunications, resources, swimming schools, electrification, agriculture, credit/bonds and financial services.

Why I continue buying this ASX 200 stock

The track record of this company is impressive – in the 20 years to 31 July 2024, it has returned an average of 11.7% per annum, beating the market by an average of 3% per annum during that period.

As a bonus, it continues growing its dividend, which I find appealing. The payout has risen every year since 2000. Investors can choose to reinvest their dividends or receive them as cash.

Remember, past performance is certainly not a guarantee of future performance.

I believe Soul Patts' current portfolio is well-suited to keep performing in the shorter term, whether the Australian economy enters a recession or starts recovering. Its defensive, cash-flow-producing assets are an excellent attribute of the company

However, the world is always changing. Businesses need to be able to adapt to continue to succeed. No one can truly know how the artificial intelligence (AI) theme will play out or what the next meaningful geopolitical event or any other 'macro' event will be.

I think the best attribute of this ASX 200 stock is that it has a very flexible investment mandate. It can invest in almost anything, any market capitalisation, listed or private equity, different asset classes (such as bonds), and even different countries.

Soul Patts started as a pharmacy business in the early 1900s, and it only recently divested its exposure to pharmacies when Australian Pharmaceutical Industries was acquired by Wesfarmers Ltd (ASX: WES). Soul Patts is an entirely different business.

The company's portfolio could look very different in 20 or 30 years, but Soul Patts has shown it's willing to adapt its portfolio to ensure its long-term success. Recent investments include electrification, agriculture and swimming schools. It operates like a family office, with a strategy that could ensure multi-generational success.

It may not perform like a high-flying ASX growth share, but its active investment choices and flexibility could help it remain a good ASX 200 stock for many years to come.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

iPhone with the logo and the word Google spelt multiple times in the background.
Opinions

I've been buying these 2 US stocks in 2025. Here's why

Sometimes the US markets are a better place to go shopping for stocks.

Read more »

A man and woman sit next to each other looking at each other and feeling excited and surprised after reading good news about their shares on a laptop.
Opinions

Where I'd invest in ASX shares after the RBA interest rate cut

These stocks look really attractive to me. Here’s why…

Read more »

Miner looking at a tablet.
Opinions

3 reasons why the Fortescue share price could still be a buy

Let’s dig into why this mining giant could be a solid buy.

Read more »

A young woman wearing a red and white striped t-shirt puts her hand to her chin and looks sideways as she wonders whether to buy NAB shares
Opinions

The pros and cons of buying Wesfarmers shares in May

Is this retail giant an appealing opportunity?

Read more »

Smiling man sits in front of a graph on computer while using his mobile phone.
Opinions

2 ASX 200 shares that I think are still bargains after the market rally

These businesses look like attractive opportunities. Here’s why…

Read more »

A young woman looks at something on her laptop, wondering what will come next.
Opinions

Worried about another stock market sell-off?

Market declines don’t need to be too scary.

Read more »

An evening shot of a busy Times Square in New York.
Opinions

The pros and cons of buying US-focused ASX ETFs in the current environment

In a short amount of time, the US share market has erased the declines that it went through at the…

Read more »

I young woman takes a bite out of a burrito n the street outside a Mexican fast-food establishment.
Opinions

Time to cash in your gains? Brokers say sell on these 3 ASX 200 shares

Experts say these stocks are overvalued and it may be time to take some profits off the table.

Read more »