Is the market is finally awakening to the realisation that Aurizon is not a great investment relative to Telstra
Is the market is finally awakening to the realisation that Aurizon is not a great investment relative to Telstra? Until this week the market rewarded Telstra and Aurizon with strong price growth as both were perceived as long-term yield securities. However, Aurizon's recent reported result disclosed what was fairly obvious when comparing both companies return on equity: that Aurizon is a highly capital intensive business compared with Telstra, and has less attractive dividend payments. Aurizon appears to be an example of the overpricing of income securities as investors scramble for yield. If Aurizon cannot frank its dividends, then its share price would have to fall substantially to match the yield profile of Telstra going forward. View the full report: (VIEW LINK)
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