All of the ASX stocks in my portfolio are there for a reason. Most of these shares are (at least in my opinion) high-quality businesses with bright futures ahead of them, I don't envision ever selling. But only one enjoys my absolute confidence that it will be in my portfolio until the day I shuffle off this mortal coil.
That one ASX stock is none other than Washington H. Soul Pattinson and Co Ltd (ASX: SOL). You may have read about my love of this company at the Fool before.
But to reiterate, Washington Soul Pattinson, or Soul Patts for short, is an investing house that has been on the ASX for more than a century. It functions in a similar manner to a listed investment company in that it owns a vast portfolio of investments and manages this portfolio on behalf of its shareholders.
There are three reasons that lend me this high level of confidence in Soul Patts stock.
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Three reasons I'm never selling this top ASX stock
1. Diversification down pat
Firstly, this ASX stock is inherently diversified, meaning individual company risk is far lower than that of your average company.
Soul Patts' investment portfolio is wide-ranging in scope. For one, it owns large chunks of a handful of other quality ASX stocks. These shares include TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), New Hope Corporation Ltd (ASX: NHC), and Brickworks Ltd (ASX: BKW).
Although these 'strategic' investments form a foundational bedrock for Soul Patts, the company also owns a portfolio of blue-chip ASX stocks. These include relatively smaller allocations to BHP Group Ltd (ASX: BHP), Wesfarmers Ltd (ASX: WES), and Macquarie Group Ltd (ASX: MQG).
In addition to these portfolios, Soul Patts also has investments in private credit, venture capital, and property. These all add up to a highly diversified earnings base, which lends me a lot of confidence in this company's fundamentals.
2. Smashing the market over two decades
Secondly, Soul Patts has a proven track record of delivering market-beating growth. After all, diversification isn't too useful when it can't put runs on the board.
Back in November, this ASX stock affirmed to investors that its shareholders have enjoyed an average total return (share price growth plus dividends) of 11.7% per annum over the 20 years to 31 July 2024.
In contrast, an investment in the All Ordinaries (ASX: XAO) Index returned 8.7% per annum over the same period. Past performance is never a guarantee of future returns, of course. But I think these statistics give us a fair idea that Soul Patts' management knows what it's doing.
3. ASX stock or dividend aristocrat in the making?
Finally, Soul Patts has hands-down the best dividend track record on the ASX.
On the surface, this company's current yield of under 3% doesn't look too impressive. But when we consider that Soul Patts has increased its annual dividend every single year since 2000, we can see why this ASX stock is a top investment in my eyes.
No other ASX stock can boast a record of that calibre today. If Soul Patts holds the line in 2025, it will become the ASX's first-ever dividend aristocrat (to my knowledge, anyway).
