Are infrastructure stocks’ dividends unsustainable?

Perpetual Equity Investment Company

Perpetual Asset Management (Australia)

The utility and infrastructure sectors have performed strongly over recent years. In an environment where interest rates are low, it would appear that their dividend yields are competitive with deposit rates - and there is the potential for capital growth. Some have steadily growing dividend yields of between 4% and 5%. But is too good to be true? I happen to think it is. That’s because none of the Australian infrastructure and utilities companies I’ve looked at have sustainable long-term dividend policies. People tend to forget that at the end of the concession, the company has to hand the road back to the government debt-free. So there is no asset at the end of the day. Given there is a lot of debt held against the asset, at some future date the company is going to have to start paying down the debt. Read the full story: (VIEW LINK)


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Perpetual Equity Investment Company
Perpetual Asset Management (Australia)

The Perpetual Equity Investment Company Limited is an ASX listed investment company offering investors access to a portfolio of predominantly high quality Australian and global listed securities, selected by Perpetual Investment Management Limited.

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