Can Sydney Airport Holdings Ltd stare down rising bond yields?

The threat of rising bond yields could be less of an issue to Sydney Airport Holdings Ltd (ASX:SYD) than one might expect as the company enjoys the tailwinds of rising tourism.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sydney Airport Holdings Ltd's (ASX: SYD) latest traffic results prove that not all infrastructure stocks are facing the same threat of rising bond yields.

The prospect of higher bond yields that's sparked by a lift in interest rates in the United States later this year has left some wondering if the outperformance of this class of stocks is about to come to a sudden and painful end.

This fear isn't extended to Sydney Airport today with the stock jumping over 1% in a flat market to $5.37 after management reported a 2.5% increase in passengers flowing through its airport in February, when compared to the same time last year.

Any income stock that can grow earnings will be more resilient to rising bond yields as it can increase its dividend.

This is certainly the expectation for Sydney Airport as it is well placed to benefit from the falling Australian dollar.

The weaker currency will make Australia a more attractive holiday destination for international travelers. At the same time, the unfavorable exchange rate and sluggish economy will encourage locals to opt for the more cost effective domestic holiday.

Inbound Chinese tourists are leading the charge with Sydney airport reporting a 23.7% surge in visitors from that country due to the Chinese New Year holidays, while Indian tourists are in second place with a 15.6% increase.

SYD

However, the locals are also fueling much of February's increase as domestic passenger numbers lifted 2.7%. Domestic passengers accounted for 65% of the total 3 million passengers that moved through Sydney's terminals in February.

Sydney Airport isn't the only one benefiting from this thematic. As Tim McArthur reported last month, Mantra Group Ltd (ASX: MTR) also delivered a robust interim result.

I have a feeling this trend will be playing out for some time. Although Sydney airport is one of a number of income stocks for investors to consider.

Motley Fool contributor Brendon Lau doesn't own shares mentioned in this article Follow me on Twitter - https://twitter.com/brenlau The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »