Transurban share price jumps as dividends hit pre-pandemic highs

The toll road operator is in the green today after announcing some good news for shareholders.

| More on:
A man leans out of his car window with a massive smile on his face and waves.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Transurban share price lifts after the group increased its final distribution by more than 20% to 21.5 cents
  • The distribution is the highest since 2019 – just before the global COVID-19 pandemic
  • But the bigger distribution may not be the only factor lifting sentiment towards the toll road operator

The Transurban Group (ASX: TCL) share price is outperforming the market this morning after it announced an increase in its final dividend.

The toll road operator said it will pay a distribution of 26 cents a security for the six months ending 30 June 2022.

This is the highest final dividend that the group has paid since 2019, just before the COVID-19 mayhem.

Increase in dividends lifts Transurban’s share price

The final dividend also represents a 21% increase over the 21.5 cents a security payment it made this time last year.

The news sent the Transurban share price revving up 2.2% to $13.93 in early trade. This compares to a flat open for the S&P/ASX 200 Index (ASX: XJO).

Distribution details

The final dividend is made up of a 24 cent a security payment from the Transurban Holding Trust and its controlled entities. The balance is paid from Transurban Holdings Limited.

This takes the full-year dividend to 41 cents a security which gives a net yield of 3% using the current Transurban share price.

Of the total FY22 distribution, 2 cents of this are fully franked. The distribution may also be tax-deferred and more details will be released in August.

The distribution also includes the circa 2.5 cents per security in capital releases. This is related to Transurban’s increased stake in WestConnex where the capital releases are used to minimise the dilutive impact of the deal.

Other tailwinds for the Transurban share price

The increase in distributions may not be the only factor driving interest in the Transurban share price.

Some experts believe that ASX infrastructure shares are likely takeover targets in this volatile environment.

Such shares, including Transurban, generate a relatively stable earnings stream. Their contracts also typically provide an inflation adjustment too.

Do ASX infrastructure shares make good targets?

These are desirable qualities given the high inflation outlook with rising costs threatening to erode corporate profits.

Fears of a sharp economic slowdown in the form of stagflation or a recession only make defensive ASX shares like Transurban more desirable.

Other ASX shares with similar qualities to the Transurban include APA Group (ASX: APA) and Atlas Arteria Group (ASX: ALX) with the latter facing a potential takeover.

The Transurban share price has fallen around 5.6% over the past year, even with today’s rally. In contrast, the ASX 200 has lost more than 12% during the period.

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

a young woman raises her hands in joyful celebration as she sits at her computer in a home environment.
Share Gainers

Why CSL, IPH, Renascor, and Treasury Wine shares are pushing higher

These ASX shares are having strong days. Here's why...

Read more »

Three children wearing athletic short and singlets stand side by side on a running track wearing medals around their necks and standing with their hands on their hips.
Share Gainers

3 tiny ASX mining shares leaping over 20% on project announcements

Why are these shares soaring today?

Read more »

a small boy dressed in a superhero outfit soars into the sky with a graphic backdrop of a cityscape.
Resources Shares

Guess which ASX lithium share just rocketed 20%

The Aussie-based lithium explorer is now the largest holder of lithium mining claims in the US state of South Dakota.

Read more »

Female miner smiling at a mine site.
Share Gainers

Why has the Mineral Resources share price surged 40% in a month?

What a month it has been for Mineral Resources shares.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Share Gainers

Why Brambles, Challenger, Nearmap, and Super Retail shares are rising today

These ASX shares are having strong days...

Read more »

Three women cruise along enjoying ice-creams in the sunshine.
Share Gainers

3 ASX 300 shares having a cracking session today

These ASX 300 shares are parading big gains today...

Read more »

Three happy shoppers.
Retail Shares

Why are ASX 200 retail shares having such a stellar run today?

ASX 200 retail shares are on fire today. What's put a rocket under this ASX 200 sector?

Read more »

Rocket powering up and symbolising a rising share price.
Share Gainers

Guess which tiny ASX mining share just rocketed 45% on new copper and gold finds

The micro-cap ASX miner is hitting some rich mineral veins in the Northern Territory.

Read more »