Is Sydney Airport Holdings Pty Ltd (ASX: SYD) share price a buy for the income?
Sydney Airport has been one of the best blue chips to own over the past five years with its share price alone rising by 69%, which doesn't include the growing income.
In 2013 it paid income of 22.5 cents per share and in 2019 it is on track to pay 39 cents per share, an impressive increase of 73% in a relatively short time.
The main attraction about Sydney Airport's business has been the continual growth of passengers.
According to its full year 2018 market release, the airport operator grew total passengers by 2.5% to 44.4 million, with international passengers increasing by 4.7%. This supported earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 7.2% to $1.28 billion.
Sydney Airport has done a good job of extracting more money out of passengers as each year goes by with its higher passenger fees, its retail offering, car parking and so on. In 2018 it grew revenue per passenger by 4.1% to $35.70 and EBITDA per passenger by 4.5% to $28.90.
The upcoming guided 39 cents per security distribution represents a 4% increase from the year before, which had grown 8.7% compared to 2017. These payouts do represent paying out most of the net operating receipts, but there is a small amount retained for re-investment.
Foolish takeaway
If total passenger numbers and profit per passenger continues to increase then Sydney Airport could be a decent long-term income stock. However, with an income yield of only 5.5% for 2019 I don't think it looks good value at the moment, perhaps if the yield started with at least a 6 it would be a bit more interesting.
