Transurban Group (ASX: TCL) has often been a stock favoured by income-seeking investors given its defensive revenue base and the maintainable and predictable nature of its dividends. With ownership of CityLink, Hills M2 and Lane Cove Tunnel toll roads, and interests in a number of other toll road assets spanning Victoria, NSW and the USA, Transurban has a diversified portfolio of interests.
During the half, Transurban was also successful in securing the debt of the CrossCity Motorway in Sydney – this puts the company in the driver's seat to secure the assets and would ultimately spur future growth for the group given the synergies available with the adjoining Eastern Distributor network of which Transurban owns 75.1%.
Interim Results
- 3.4% increase in average daily traffic
- 13.1% increase in proportional toll revenue
- 11.1% growth in EBITDA
- 17 cent distribution to be paid on 17 February
Yield
The shares were barely changed after the interim results were released with the stock up just one cent to $6.83 for the day. Thomson's consensus estimates show analysts are forecasting earnings per share of 18.2 cps this financial year and dividends of 34 cents. After management's presentation which stated that Transurban was forecasting a distribution totalling 35 cents for the full year (up from 34 cents in FY 2013), presumably analysts will be upgrading their estimate. Assuming 35 cents is ultimately paid, then Transurban is currently trading on a forward partially franked dividend yield of 5.1%.
Foolish takeaway
There are few listed monopoly-type assets such as toll roads and airports which investors have the opportunity to own in Australia. As Transurban's growth has shown there are definitely appealing reasons for owning these monopoly-types assets. Macquarie Atlas Roads Limited (ASX: MQA) and Sydney Airport Holdings Ltd (ASX: SYD) are two other companies worth the attention of investors who are seeking businesses with reliable and defensive earnings streams.
