The Transurban Group (ASX: TCL) share price has fallen out of favour in recent months. This has primarily been due to a lack of capital gains and dividends. Consequently, the company has been overshadowed by ASX 200 shares such as BHP Group Ltd (ASX: BHP).
However, the company’s investor presentation this week revealed positive traffic trends and a number of near-term growth initiatives.
Could this put the Transurban share price back in the spotlight as a top dividend stock?
Investor briefing
Transurban’s investor presentation notes that emerging indicators in Australian markets suggest that working from home is not going to fundamentally alter long-term traffic growth.
Its findings observe movements in central business districts continuing to recover and peak hour traffic patterns looking similar to pre-COVID. The company also notes that the preference for private vehicle travel over public transport may be enduring. It is believed that this is primarily due to concerns about personal safety. The recent growth in new and used car sales and car ownership supports the view that public transport diversion is likely to continue.
Transurban highlighted a number of opportunities in the pipeline in Australia and North America. In the next five years, the company is exploring the acquisition of the NSW Government’s 49% stake in WestConnex, M7 staged widening and an M7/M12 interchange. Near-term growth opportunities also exist in North America where a number of express lane extensions and acquisition opportunities are available.
Broker weighs in on the Transurban share price
Macquarie found the investor briefing to be more strategic rather than financial in nature. The broker observes the significant number of major projects and pipeline. Furthermore, the agenda is likely to expand as governments deal with congestion.
Macquarie points to growing possibilities. These include the Beach Link in NSW, North Eastern in Victoria, and the 2032 Olympic bid in Brisbane.
Despite the growth opportunities and outperform rating, the broker’s target price of $14.51 represents an upside of just ~3.5%. Macquarie is forecasting a full year FY21 dividend of 40.20 cents, which represents a yield of 2.87% at today’s prices.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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