There are a number of great ASX dividend shares for Aussie investors to choose from, but there is one that stands out to me above them all: Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).
I've written about the investment house numerous times, but the news that it's essentially acquiring Brickworks Ltd (ASX: BKW) is a great move, which puts it in an even stronger position.
I'll outline three reasons why the business is so attractive to me as an ASX dividend share.
For me, the most important factor for an ASX dividend share is reliability. If I'm focused on passive income, I want to have a high level of confidence that the dividends will continue to flow even in the event of an economic downturn.
Soul Patts has grown its dividend every single year since 2000, which is the best record on the ASX. That's not just random – I think it can continue that record due to factors I'll discuss soon. The ASX dividend share has also paid a dividend each year in its 120-year history.
Brickworks hasn't cut its dividend in almost 50 years, so those shareholders will also be expecting Soul Patts to continue that high level of stability.
A key element of its dividend strength is how the business is invested in a number of (virtually) uncorrelated sectors.
Lots of industries go through cycles, or are exposed when there's an economic downturn.
With how Soul Patts' portfolio is diversified, the earnings are usually strong enough year to year to increase the dividend without needing to raise the dividend payout ratio to an uncomfortable level.
Some of the sectors it's invested in include resources, telecommunications, swimming schools, financial services, agriculture, credit and more.
Not only is diversification a great tool to reduce risk, but it also opens up more investment opportunities. The wider Soul Patts can throw the net for ideas to find the best opportunities, the stronger the potential returns could be.
I'm particularly excited by the ASX dividend share's move to acquire Brickworks' industrial portfolio. At the end of the FY25 first half, Brickworks' share of the property trust assets came to $2 billion. These are industrial warehouse properties in a joint venture alongside Goodman Group (ASX: GMG).
Not only can future RBA rate cuts help boost the underlying value of these warehouses, but the rental profits from the property trust could grow significantly thanks to an increase in the market rent and future projects that will be completed.
In the Brickworks HY25 result, it said its current facilities are generating a passing rent of $189 million per year. It outlined that the current market rent and planned developments could increase the annual rent to $341 million.
This could materially help fund larger dividend payments from Soul Patts, making it an even more attractive ASX dividend share.
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