I could Washington H. Soul Pattinson & Co., Ltd. (ASX: SOL) (WHSP) be the safest share of ASX?
WHSP is a large investment house, which means that its goal is to invest in other companies and assets.
Why is this a safe option?
It can be difficult to be the only business with only one key source of income. Look at the end of some things like department stores, Blackberry and Blockbuster. Disruptions may occur.
Who knows what next industry will face difficulties?
Many ASX stocks focus on just one sector – resources, retail, banking and so on.
However, WHSP has a diversified portfolio spread over a wide range of assets. The industries in which it is invested include telecommunications, construction goods, resources, financial services, agriculture, swimming schools and so on.
It has a variety of portfolios, including a large-cap portfolio, a private investment portfolio, a portfolio of new companies, a “structured return” portfolio and real estate. It has a “strategic portfolio” with titles like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC) and Tuas Ltd. (ASX: TUA).
It’s diversified, yes. Diversification is good. But diversification alone does not make it potentially the safest option.
It’s unlimited. A flexible investment mandate allows businesses to invest and support companies from an early stage and grow with them in the long run.
WHSP is committed to investing in the long run by being disciplined and having a value-oriented approach to investing through market cycles to deliver profits in the long run.
Perhaps most importantly, WHSP is trying to provide capital protection. He has created a portfolio of assets that can generate reliable cash flow through market cycles, which can protect the “negative side” when the market declines.
In other words, the portfolio is designed to be good in both good and bad times.
But “safe” can mean more than just protection from flaws. I think the fact that it can invest in almost anything means it can be secured by the future and stay economically relevant for much longer than most other ASX stocks.
Current investment environment
WHSP acknowledged in The result is HY22 that asset markets are volatile and a lot of uncertainty. Thus, it focuses on investments that have “strong defensible cash flows and growing profits and dividends”.
However, he said it is well positioned for rising rates, inflation and volatile market conditions.
I think WHSP is a solid business. I’m not going to buy stocks at the current WHSP stock price, although that may be a decent price in the long run.
In my opinion, this is one of the leading ones ASX dividend shares around. At least for long-term reliability.