The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price has hit some turbulence. SYD shares have now lost around 8.6% over the past two weeks and are going for $8.25 at the time of writing. That's an 11% decline from the 52-week (and all-time) high of $9.30 that Sydney Airport shares banked late last year.
So is this pullback a buying opportunity for Sydney Airport – a company that has seemingly been on an ever-upwards trajectory for the past few years?
Why are Sydney Airport shares crashing?
It's difficult to say for certain what has caused these share price movements, but I think its no coincidence that the declines started to appear around the same time as the coronavirus outbreak that is currently gripping China started gathering increased coverage.
Australia is a major tourist destination for Chinese tourists and Sydney Airport is the largest international gateway for tourism in the country. Obviously, a disease outbreak like this results in travel restrictions along with a drop in demand for travel in general. You don't have to be a genius to put two and two together in this instance to work out what the consequences for Sydney Airport might be.
Are Sydney Airport shares in the bargain bin now?
Although Sydney Airport shares have had a sharp pullback in recent weeks, it's hard to say they're now in the bargain bin. This stock still trades on a price-to-earnings multiple of just under 47. That's extremely high for a defensive share like Sydney Airport – especially if you consider the current market average is around 19.
Of course, most investors chasing Sydney Airport shares are doing so for one reason: the dividends. As a defensive dividend payer, this company has gained a reputation as somewhat of a 'bond proxy' stock – meaning it's one of the closest things you can get to safe and reliable bond-like income from the share market (that's the perception of this company, anyway).
Even at $8.25, Sydney Airport shares offer a starting yield of 4.72% today. That isn't a bad yield form an income perspective in my view, considering how low interest rates are at the moment. I also think it's likely that yield hungry investors will come in and start bidding up Sydney Airport shares if the yield rises too much further from here.
Foolish Takeaway
Although the company is facing some short-term headwinds from these issues, I don't see any long-term pain for the competitive advantages that Sydney Airport enjoys. I wouldn't be buying Sydney Airport shares at their current price, but I think if you're an income investor who's been watching this space, it might be a good time to strike.
