Down 17%, is this top ASX passive income stock a strong buy at its 52-week low?

Transurban Group (ASX: TCL) shares have fallen to a fresh 52-week low on Tuesday.

The toll road operator is trading around $12.91, roughly 17% below its 52-week high of $15.62.

For investors looking for passive income, I think that decline is worth paying attention to.

Why I like Transurban for income

Transurban owns and operates major toll road networks in Australia and North America.

I think the nature of those assets makes the company particularly well suited to income investors. Roads such as CityLink in Melbourne and WestConnex in Sydney provide essential transport infrastructure, while traffic volumes and toll revenue give Transurban a substantial cash flow base.

That allows the company to return a meaningful amount of cash to shareholders.

Transurban paid dividends of 69 cents per share in FY26, and consensus forecasts point to continued growth from here.

According to CommSec, analysts expect dividends of 72 cents in FY27, followed by 73 cents in FY28 and 76 cents in FY29.

At the current share price, the FY27 forecast represents a dividend yield of approximately 5.6%. By FY29, the potential yield rises to almost 5.9% if those forecasts are achieved.

I think that looks attractive for an infrastructure business with the potential to gradually increase its dividends.

But what about rising interest rates?

This is probably the biggest issue I would consider before buying today.

Transurban can behave somewhat like a bond proxy.

Income-focused investors often value infrastructure businesses partly on the dependable dividends they can provide. When interest rates and bond yields rise, safer income investments can become more competitive, which can reduce the price investors are willing to pay for shares like Transurban.

There is also a more direct consideration. Infrastructure businesses typically carry substantial debt because of the enormous cost of building and acquiring assets. Higher interest rates can therefore increase financing costs over time.

That does not make Transurban identical to a bond. Its earnings can still grow as traffic increases, tolls rise, and the company develops its asset base. But I think rising rates help explain why investors may demand a higher yield before buying the shares.

At $12.91, that adjustment is starting to work in my favour.

Is the 52-week low a buying opportunity?

I think so. The lower share price means new investors are now receiving a much stronger potential dividend yield than they would have near the 52-week high.

Importantly, consensus forecasts are also pointing to distributions continuing to rise rather than falling.

There are still reasons to be cautious. Further interest rate increases could keep pressure on infrastructure valuations, while higher financing costs are something I would continue watching.

But I am investing for the passive income Transurban could produce over many years, rather than trying to pick the exact bottom in its share price.

Foolish takeaway

At $12.91, I think Transurban has become attractive for passive income investors.

A forecast FY27 dividend yield of around 5.6% gives me a solid starting return, while the prospect of gradual growth adds to the longer-term case.

Interest rates could keep the shares under pressure for a while yet. For me, though, that is also helping create the price at which I would be happy to start buying.

The post Down 17%, is this top ASX passive income stock a strong buy at its 52-week low? appeared first on The Motley Fool Australia.

More reading

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• How to build a $50,000 passive income from ASX shares
• Can Transurban shares rebound from a 52-week low?
• How much passive income can I earn off an $800,000 superannuation balance?
• 3 top ASX dividend shares to target this week for lifelong income

Motley Fool contributor Grace Alvino has positions in Transurban Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.