Stock of the day: Washington H. Soul Pattinson, Brickworks

(AI video summary)

This video was created on 26 September for IG audiences by ausbiz.

ASX code: SOL, BKW

Suggestion: Hold

Financial performance of Soul Patts and Brickworks

Washington H. Soul Pattinson (Soul Patts), an Australian investment house, reported a significant 27.78% decline in its four-year profit, primarily attributed to its strategic holdings in companies like Brickworks and New Hope. Despite this overall dip in earnings, Soul Patts's dividend payments saw a 9.20% increase, reaching $0.95 per share. This indicates a stable dividend strategy designed to provide consistent returns to its investors.

Brickworks, one of Soul Patts's key holdings, experienced a four-year statutory loss of $119 million. This was largely due to challenges in its building products division and property asset devaluations. However, analysts noted an increase in rents in its industrial properties, presenting a potential growth area. Investors are advised to approach Brickworks cautiously but recognise the support from rental income growth and underlying asset value.

Brickworks and its future prospects

Brickworks has been dealing with significant challenges in its building products sector, prompting temporary plant closures to manage inventory better. Despite these short-term hurdles, the company's focus on industrial properties, which saw rising rental rates, offers a silver lining. Analysts suggest viewing Brickworks as a hold rather than an immediate buy, owing to its robust property portfolio and potential for rental income growth.

An example of Brickworks' potential can be seen in its industrial property trust, which is currently under-rented by about 40.00%. With a strategic focus on closing this gap, the company could see significant future gains. This makes Brickworks a stock to watch for those interested in property investments with long-term potential.

Investment strategy

Investors are encouraged to consider holding these stocks, especially in times of broader market panic, as they tend to offer stable returns. While not necessarily presenting immediate buying opportunities, both Soul Patts and Brickworks represent solid investments for those looking to build a resilient and steady portfolio.