I started building a position in Brickworks in December. I've held Soul Patts, which has a large cross shareholding with Brickworks, for a almost nine years.
My understanding from general reading is that Brickworks is currently better value than Soul Patts so is a better buy (although I did top again up on Soul Patts this morning).
Brickworks makes bricks. A nice boring business producing something that almost everyone uses (whether directly or indirectly). There is some cyclicality to the business, along with activity in the construction sector, but over the long term people keep buying bricks to build homes and other structures.
The more interesting part of the business is that bricks are made of clay. Clay needs to be dug out of the ground, from quarries. Brickworks buys land, often out of town, and for many years digs the clay until the quarry is empty.
What has been happening over the past few decades is that by the time the quarry is finished, the nearby towns and cities have grown and the land that Brickworks owns has become more valuable. Brickworks then sells the land for a large profit or develops the land in cooperation with a property trust. This is proving a great source of revenue.
Consequently, Brickworks has proven to be a great long term dividend payer. Another source of revenue is its shareholding in Soul Patts - arguably the best dividend payer on the ASX over the long term.
