S&P/ASX 200 Index (ASX: XJO) monopoly stocks have some unique advantages when it comes to paying reliable, regular passive income.
A monopoly stock, if you're not familiar, is a company that is so dominant in its particular market that it faces few, if any, competitors.
This enables them to control their prices without fear of losing business to the competition. Which can be a pretty handy tool, especially in light of the past years' run up in inflation.
That's why I'd target Transurban Group (ASX: TCL) shares for some handy extra annual passive income.
Now, please do note that we're looking at a single ASX 200 monopoly stock here. A lower-risk ASX passive income portfolio should be properly diversified, holding a number of stocks operating in various industries.
With that said…
What's happening with Transurban shares?
The ASX 200 toll road operator and developer is active in Australia and North America. Transurban has 17 toll roads in its Australian portfolio, five in the United States, and one in Canada.
Transurban reported its full-year results on 16 August. Among the highlights, the company achieved record proportional toll revenue of $3.3 billion in FY23. That was up 26% from FY22.
And Transurban's income is broadly protected from inflation, which in turn helps safeguard the passive income investors receive from the ASX 200 monopoly stock.
In its FY23 results the company noted that "additional inflation linked escalations" were likely to positively impact its FY24 income due to the timing of its price increases.
Commenting on the outlook for passive income in the year ahead, CEO Scott Charlton said:
In FY24 we now expect to pay a record distribution of 62.0 cents per share, representing a 7% increase on FY23.
With positive traffic growth across our key markets, embedded escalation at or above inflation on the majority of revenue and the continued progress on key growth projects, we are well-placed to grow distributions and deliver long term value.
The ASX 200 stock could deliver even more passive income in FY24
Over the past 12 months, Transurban paid an interim dividend of 26.5 cents per share, unfranked, and a final dividend of 31.5 cents per share, 3% franked.
That brings the full year of passive income from the ASX 200 monopoly stock to 58 cents per share, up 40% from the FY22 payout.
At the current Transurban share price of $13.18, that equates to a trailing yield of 4.4%.
Crunching the numbers then, I'd need to buy 1,724 Transurban shares today for a $1,000 annual passive income.
Of course, if Charlton's forecast of 62 cents per share in FY24 dividends proves true, then I'll be banking $1,068 in passive income from those shares in the year ahead.
