Why these 2 infrastructure shares could be buys

For income-seekers there is always a balance between the current yield, future growth and how reliable the dividend is.

Infrastructure could provide the perfect mix for what investors are after.

More and more people are going to be living in cities as time goes on. That’s where most of the opportunities and amenities will be focused.

The current infrastructure will be very important for those cities, as well as any new infrastructure that is built.

There aren’t many options on the ASX to invest in infrastructure, but here are two of the best:

Transurban Group (ASX: TCL)

Transurban is the operator of many tolls roads in Australia as well as a few in the USA.

Major road arteries are becoming increasingly important as the only way to get from one part of the city to another part efficiently.

Transurban can point to how using its roads can literally cut a driver’s travel time in half, if not more. Time is money, of course – Transurban’s money once you use one of its roads.

The medium-term threat that I see for Transurban is automated cars. The argument is that people could just choose to avoid toll roads. However, if the best-case scenario happens for automated cars then there will likely be even more cars on the road.

Toll road operators will also likely be the first to allow automated cars on their roads, meaning they could benefit from the change, rather than be hindered.

Transurban is currently trading with a distribution yield of 4.02%.

Sydney Airport Holdings Ltd (ASX: SYD)

Sydney Airport Holdings is the operator of Sydney Airport.

It’s benefiting strongly from the Asian tourist boom that is helping grow international passengers by double digits compared to last year.

The world is becoming a smaller and more connected place with the growing number of flights to and from Australia.

Sydney Airport is the only place to truly fly into Australia’s biggest city and tourist attraction. The government may have sanctioned another airport for almost a decade away, but I don’t think it will cause much damage to Sydney Airport Holdings’ potential earnings.

Sydney Airport Holdings is currently trading with a dividend yield of 4.42%.

Foolish takeaway

I think both shares will grow their underlying businesses impressively over the next few years. The problem for me is the valuation, I wouldn’t want to buy shares in either business unless they were at least 10% cheaper than they are now.

Instead, I'd want to get my dividends and growth from this stock that's growing in Asia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Sydney Airport Holdings Limited. 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.

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