Is the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price a buy for income?
Since 2012 it has been one of the best performing blue chips with the share price up 158% in six years, plus the dividend has grown from $0.21 per share to $0.375 per share during 2018.
It has undoubtedly been a solid choice for income and total returns, but what matters is what happens from here.
The strength of the performance of the share price suggests investors think Sydney Airport's prospects have improved since the start of 2019.
As I've always said, a business is as only as strong as underlying earnings. Sydney Airport's earnings is reliant on the number of passengers that travel through the travel hub, with Sydney Airport benefiting from passenger fares, parking, retail and so on. Those passenger numbers are certainly higher compared to a few years ago, but the trend isn't good at the moment.
The domestic travel industry is suffering with Australia's sluggish economy, plus Chinese passenger growth has halted with Australia and the US making them feel a little less welcome.
March 2019, February 2019, December 2018 and November 2018 all showed a decline in the number of domestic passengers travelling through Sydney Airport. Indeed, February showed a decline of 2.7% of domestic passengers and March showed a decline of 3.4%.
The last 12 months now show domestic passenger numbers down very slightly and total passenger growth has only been 1.2% because of the 3.2% growth of international passengers.
Foolish takeaway
Australia is still a very popular tourist destination for people from around the world, which is why passengers from most Asian countries and the USA continue to grow.
However, it seems Sydney Airport's growth is not as assured as it seemed before, particularly with struggling domestic passengers. Its dividend yield of 5% is not enough to tempt me to buy shares, the Sydney Airport share price would have to be at least 20% lower for me to think about it.
