The Transurban Group (ASX: TCL) share price has continued to trade sideways this month.
This has largely been the case all year, with the toll road operator's shares up just 1% in 2021.
Can the Transurban share price climb higher?
The team at Morgans believe there's room for the Transurban share price to push higher from here. Together with its attractive and growing dividend yield, the broker appears to believe this make it a good option for income investors.
According to a note, its analysts have retained their add rating but trimmed their price target on the company's shares to $14.57.
Based on the current Transurban share price, this implies a return of 6% for investors before dividends and 8.5% including the 35 cents per share dividend the broker is forecasting in FY 2022.
Though, it is worth noting that Morgans expects a big increase in Transurban's dividend the following year to 55.2 cents. This represents a far more generous yield of 4% for investors.
What did the broker say?
Morgans notes that Transurban has reached an agreement with the Victorian Government and the CPB John Holland Joint Venture on revised terms for the delivery of the West Gate Tunnel Project (WGPT).
This will see Transurban contribute an additional $2 billion to the WGTP across FY 2023 to FY 2026, which is $0.9 billion above what Morgans had previously assumed.
And while it thinks the size of Transurban's "financial contribution to complete the WGTP will be disappointing for investors, resolution of the dispute removes a major uncertainty."
Furthermore, the broker believes the "NPV impact is partly reduced by the later phasing of the spend and also by the increased tax depreciation shield it creates until concession end."
Why invest?
Morgans remains positive on the future and notes that there are a number of trends that are supportive of Transurban's growth.
It explained: "We view TCL as a high quality pure-play toll road infrastructure portfolio benefitting from employment and population growth, urbanisation, and the value of time, with particular exposure to the east coast capital cities in Australia."
