When ASX dividend giants go through a sell-off, it can be an interesting time to consider an investment. Aurizon Holdings Ltd (ASX: AZJ) shares hit a 52-week low of $2.92 last week. This comes after a period of declines, as the chart below shows. In the past five years, it has dropped 36%.
While the business' earnings aren't exactly surging, it's possible its shares have been oversold.
For readers that don't know this business, it's the largest rail company Australia. It has extensive rail, road and ports infrastructure. Coal is a key commodity that's transported on Aurizon's network, but it also moves retail goods and groceries in containerised freight to cities and towns, as well as grain, phosphate and iron ore.
It operates and manages more than 5,100km of track infrastructure, supporting domestic and export industries, including the Tarcoola to Darwin railway. The Central Queensland Coal Network is one of the world's largest coal networks.
Is this a good time to look at the ASX dividend giant?
Broker UBS recently highlighted in a note that the infrastructure business gave a trading update earlier in May that implied that, between January to April 2025, volume was down 6% in the coal segment, down 12% in the network segment and down 20% in the bulk segment.
Those numbers were broadly similar to what UBS was expecting considering the coal industry's export volumes as a whole showed Queensland coal volume was down 12%, mainly due to weather disruption, while "the above rail outcome suggests some [market] share gains, more likely in NSW" because Aurizon cited growth in NSW while industry export volumes were down 7%.
UBS said lost network revenue for the ASX dividend giant will be recouped either through 'take-or-pay', with that figure determined late in FY25, or through revenue cap adjustments in FY27.
However, bulk volumes were "also disappointing, with no visible recovery" from the run rate in the first half of FY25.
The broker believes the dividend yield provides some downside protection, "especially given the room to lift the dividend payout ratio". UBS currently forecasts Aurizon could pay a (partially franked) dividend yield of 6.5% in FY26 and 7.5% in FY27.
UBS then said:
We see potential upside should Aurizon's review of 'the Group's capital and Network ownership structures' result in a strategic move that highlights latent value in the portfolio; however we see potential downside if Aurizon was to invest materially further into non-coal opportunities (such as land-bridging) without more evidence of a strong ROIC outlook.
Price target on Aurizon shares
UBS has a price target of $3.20 on the business. This implies a potential rise of nearly 10% over the next 12 months from where it is today.
The business could be an interesting ASX dividend giant to consider, particularly if it's able to grow the dividend and earnings in the next few years. But, it's not the only ASX dividend share I'd be looking at.
