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Why WHSP (ASX:SOL) could be the best ASX dividend share

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) could be the best ASX dividend share, and I’m going to tell you why.

WHSP has a really strong claim to being the best dividend share in my opinion.

Diversification

This business is an investment house that’s been listed for almost 120 years. I think that’s really strong longevity.

Being an investment house means that it is invested in a large number of different private and public businesses. It’s invested in an array of different industries including telecommunications, building products, property, resources, financial services, listed investment companies (LICs), pharmaceuticals, technology, agriculture and swimming schools.

This is represented by a diverse, but fairly concentrated portfolio.

Holdings include: TPG Telecom Ltd (ASX: TPG), Tuas Ltd (ASX: TUA), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC), Apex Healthcare, Milton Corporation Limited (ASX: MLT), Bki Investment Co Ltd (ASX: BKI), Pengana Capital Group Ltd (ASX: PCG), Pengana International Equities Ltd (ASX: PIA), Australian Pharmaceutical Industries Ltd (ASX: API), Clover Corporation Limited (ASX: CLV) and Bailador Technology Investments Ltd (ASX: BTI).

The above names are just the notable, larger positions in the ASX dividend share’s portfolio – it has plenty of other holdings each worth millions, including blue chips and small caps.

You get all this diversification from just one investment. I like that it can continue diversifying its portfolio as much as it wants to. It can invest in anything in the world, but it has plenty of different industries and opportunities in Australia and on the ASX.

Private businesses can also be useful ideas for growth. It has a good private resources business called Round Oak as well as a growing agriculture portfolio.

Cashflow and dividends

Each year, WHSP receives dividends, distributions and interest payments from its investment portfolio.

A few defensive positions are responsible for a large amount of the overall cashflow that WHSP receives such as TPG and Brickworks.

After paying for WHSP’s operating expenses, it can then pay a dividend to shareholders.

For example, in the FY21 half-year report WHSP reported that its net cash flow from investments was $85.3 million. The ASX dividend share declared an interim dividend of 26 cents per share, which amounts to $62.2 million in total.

That means WHSP had a dividend payout ratio of around 73%, which means the business can re-invest the other 27% into more opportunities to grow its cashflow further.

Great dividend streak

WHSP has the record for the most annual ordinary dividend increases on the ASX, going back to 2000.

It may not have the biggest dividend yield – it’s only a fully franked yield of 1.9% right now – but that is partly due to the strength of the share price at the moment. Over the last year the WHSP share price has risen around 75%, faster than the underlying value of its portfolio. So I don’t think it’s a good value idea to buy presently, even if it’s a wonderful option for reliable income.

But there are still other ASX dividend shares that may be better value and good options.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

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Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, Jaz owns shares of WHSP.
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