Transurban Group (ASX: TCL) has seen its share price jump 15% so far this year to trade at around $12.00 as investors go hunting for yield.

The toll road operator has been bid up so high now, at current prices, Transurban is only paying a dividend yield of 3.8%, only partly franked too (15%).

The yield only increases to 4.2% in the 2017 financial year (FY17) with the company forecasting a distribution to unitholders of 50.5 cents – 11% higher than this year’s 45.5 cents.

For investors looking for a blue chip dividend play, Transurban is far from good value at current prices.

In the last financial year, Transurban reported $910 million of operating cash flow, and $926 million in free cash (which includes dividends and interest received from non-100% owned entities). With a market cap of $24.4 billion, Transurban is effectively trading on a multiple of 26.4x.

Additionally, on an enterprise value to EBITDA (EV/EBITDA) ratio, Transurban sports a relatively high ratio of over 24x. For a company with solid and consistent but usually low growth rates, that appears to be a high price to pay.

Another issue is that Transurban’s assets – its toll roads – have to be handed back to the government or owner debt free when the concession expires. In other words, the closer we get to those dates, the lower their value.

These are not assets that Transurban will hold forever – it is due to hand back its share of the M5 Motorway in Sydney – one of its highest revenue contributors – in 2026. A number are longer life assets – most concessions expire around 2050 – although the US assets expire in 2087.

With $12 billion of debt, Transurban paid $728 million in interest costs last financial year – not including any debt repayments. And remember that we are in an era of ultra-low interest rates.

But there’s also the question of how Transurban is going to repay that debt.

The company paid out virtually all of its cash flow per security (46.8 cents) in dividends, leaving essentially nothing to pay down debt.

Foolish takeaway

Transurban is not the safe blue chip that many envision and has a number of hidden risks that most investors appear to be ignoring.

Here are 3 more rotten shares to sell, and 1 to Buy Today

After a double-digit rally for the ASX since 2016 lows, investors should be on high alert. You'll find a full rundown below of 3 shares we think you should avoid today plus one top pick worth buying, even if the market turns south and the RBA keeps rates at an "emergency low." Simply click here to uncover these stocks

No credit card required.

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.