Out of all the developed nations of the world, Australia has one of the fastest rates of population growth. And this will not slow down – our population is expected to double by 2075. This presents some attractive possibilities for the long-term investor looking to take advantage of this trend.
Brickworks Limited (ASX: BKW): Although the current price of property has been called a bubble by some, there's no denying that having more people requires more places for those people to live.
Brickworks buys land in the path of urban development, manufactures house bricks on that land to supply the surrounding area at minimal transportation costs, then dismantles the plant and sells the land – usually at a significant profit. Brickworks trades at a trailing price-to-earnings ratio of 19 and yields a fully franked 3.1%.
DuluxGroup Limited (ASX: DLX): You don't often think of this company when the words 'growing population' crop up. We all know Dulux for its paint, which remains its largest segment.
Wisely, Dulux's management has established its paint as a premium product – something that will provide a buffer when the next downturn hits. And with other trusted household brands such as Selleys and Yates under its umbrella, Dulux is well placed to decorate the next generation of new houses in Australia while redecorating the old. Dulux trades at a price-to-earnings ratio of 19.27 and pays a fully franked 3.4% dividend.
Transurban Group (ASX: TCL): Traffic woes in Melbourne are a common occurrence, and reports of coming population growth are usually accompanied by a groan when people think of the rush hours of the future. And they're not mistaken – in the last year Transurban has recorded an increase in traffic on all but one of its toll roads and hence an increase in profit.
With an unrelenting attitude towards improving already amazing profit margins, and ever-expanding networks, when those millions of future Australians travel to and from work, chances are it'll be on one of Transurban's roads. With only a partially franked dividend and trading at a price-to-earnings ratio of 40, it is on the expensive side.
