Investment house Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) held its AGM today and gave some updates.
The AGM news
WHSP showed in a table that it has significantly outperformed the All Ordinaries Accumulation Index. WHSP’s total shareholder returns (TSR) was 33.6% over the past year, 16.6% per annum over the past five years, 12.2% over the past ten years, 11.1% per annum over the past 15 years and 14.3% over the past 20 years.
That represents outperformance of 33.7% over the past year, 7.1% per annum over the past five years, 4.1% per annum over the past decade, 4.1% over the past 15 years and 6.2% per annum over the past 20 years.
Updates
I won’t run through the FY20 result, but I am going to cover what has happened in the last few months.
It tried to make a takeover offer for Regis Healthcare Ltd (ASX: REG), which was rejected.
Major investment Brickworks Limited (ASX: BKW) is seeing its Australian building products perform well despite the challenging business environment, with the first quarter of FY21 well ahead of FY20 thanks a solid pipeline of work buoyed by government stimulus measures. It also has a large and growing exposure to industrial property. It’s involved in building a large distribution warehouse for Amazon in Sydney.
Coal prices have been impacted by COVID-19, but are recovering (up 33% in the first four months of FY21), particularly since September. WHSP decided to take the opportunity to selldown around 6% of its shares of New Hope Corporation Limited (ASX: NHC).
Road Oak, its private resources business, is benefiting from increasing copper and zinc prices (up 20% and 21% in FY21). There are long term forecasts for supply deficits globally as industrial demand increases (from renewables and electric vehicles). WHSP believes there are significant exploration and extension opportunities to expand this division.
The value of WHSP’s pharmaceutical portfolio has increased 9.7% since 31 July 2020 thanks to Apex Healthcare.
In agriculture, WHSP invested approximately $150 million in FY20 and it’s looking at new investments. There is strong global demand for quality Australian food products and Australia has a global competitive advantage. WHSP’s existing commodities include citrus, macadamias, table grapes, stone fruit and water.
In retirement living its Cronulla development continues to progress and it’s working with Provectus to examine new opportunities for luxury independent living developments.
So it’s a good time to buy WHSP shares?
WHSP said that cash generation from the portfolio remains strong to support dividends and there’s liquidity available for new investments, so it’s looking across a range of industries.
However, the WHSP share price has performed strongly in recent months and it certainly isn’t cheap any more, particularly compared to the value of its underlying assets. WHSP is a wonderful business, but it’s not a buy at any price. If you just want dependable income then WHSP’s fully franked dividend yield of just over 2% is okay, but I’d prefer to buy it at a cheaper price or a higher yield.
If I were looking for other ASX dividend shares, then I’d rather buy something like Brickworks Limited (ASX: BKW).
