Expert names a high quality ASX 200 share to buy for your retirement portfolio

Are you looking for some dividend shares to add to your retirement portfolio?

If you are, then the ASX 200 share listed below could be a top option in the current environment.

Transurban Group (ASX: TCL)

Transurban could be an ASX 200 share to buy for a retirement portfolio.

It is a toll road operator with a portfolio of important roads across Australia and the United States. These include CityLink in Melbourne, the Logan Motorway in Brisbane, and WestConnex in Sydney.

Transurban has been tipped to grow its earnings and dividend at a solid rate over the medium term thanks to population growth, urbanisation, and the time savings its roads offer.

In respect to the latter, Transurban estimates that customers using its roads (compared to alternative routes) saved a total of 323,000 hours of travel time each workday in FY 2022.

Another positive is the company’s favourable exposure to inflation through toll increases and its significant growth pipeline. It is partly for this reason that Citi recently upgraded this ASX 200 share to a buy rating with a $15.70 price target. Citi commented:

With concerns around inflation being more sticky and higher for longer, we believe investors are likely to remain attracted to companies providing protection to rising inflation. We see TCL as being particularly attractive given ~70% of toll revenue is linked to inflation, downside protection to traffic even if we enter a recessionary period (given exposure to urban roads), and inorganic upside from the current and future development pipeline.

Debt costs are rising, but longer debt maturity (c. 8 years) means the full impact will take multiple years to flow through. Despite this, the stock is currently trading inline with long term averages on an EV/EBITDA basis. We therefore upgrade to Buy with a $15.70 target price.

In respect to dividends, the broker is expecting the company to pay dividends of 53 cents per share in FY 2023 and 55.8 cents per share in FY 2024. Based on the current Transurban share price of $13.75, this represents yields of 3.85% and 4.1%, respectively.

The post Expert names a high quality ASX 200 share to buy for your retirement portfolio appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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