Beware overpaying for Transurban

Intelligent Investor

Independent Financial Research

Transurban shareholders have had an incredible run in recent years, but the future may not be so rosy. There's nothing better for leveraged income stocks than low interest rates. Take a seemingly boring infrastructure company like Transurban (ASX: TCL), which owns a geared-to-the-hilt portfolio of toll roads. The company’s $12bn of debt ensures that as interest rates fall, its interest costs fall too, allowing it to increase dividends to shareholders. What’s more, investors fed up with measly term deposit rates are willing to pay more for the inflated dividend stream, leading to big jumps in the share price. The intoxicating blend of yield and capital growth has lit up steady dividend payers like Transurban. Over the past three years, the S&P/ASX All Ordinaries Index increased around 5% while Transurban is up more than 73%, and up 21% in the past six months alone. Read full article here: (VIEW LINK)


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Intelligent Investor
Intelligent Investor
Independent Financial Research

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