New Zealand’s biggest airport is undergoing something of a transformation at the moment.
With passenger growth expected to nearly triple in the next 30 years, Auckland International Airport Ltd (ASX: AIA) is planning construction of a second runway alongside various expansions to terminals and other airport facilities.
Two recent announcements concerning foreign carriers China Airlines and Singapore Airlines indicate that more than 115,000 additional seats will be available between Singapore-NZ and Taipei-Brisbane-NZ in future reporting periods.
This will certainly attract extra tourists, and with loads of further growth predicted, investors can expect regular increases in earnings and dividends with the security of knowing that these earnings are driven by macroeconomic factors that won’t vanish overnight.
Broadly speaking, Asian nations are enjoying rapidly increasing levels of material prosperity which will in turn lead to great increases in consumption of a number of products – including tourism – from Australia and New Zealand.
Of course I can’t promise that any of these tourists will want to visit Auckland Airport and its Aussie counterpart Sydney Airport Holdings Ltd (ASX: SYD), but we’re virtually next door and it’s pretty likely.
Sydney Airport is also predicting a rapid increase in its number of passengers by 2033 (from 38 million up to 74 million), and overall it looks to be the better value airport with a higher dividend and less infrastructure spending (no additional runways) required, compared to Auckland.
However Auckland should see greater proportionate earnings growth than Sydney, given that its traffic is expected to triple; although it is difficult to predict how the relationship between the NZD and AUD will impact earnings over a 20-year timeframe.
Regardless, these are two stocks with long, favourable tailwinds, which is why at least one of them made it into my recent list of the best investments to buy and hold forever.
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Motley Fool contributor Sean O'Neill doesn't own shares in any company mentioned.
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