Transurban Group’s [ASX:TCL] share price has dropped by 1.84% this morning.
Today is the ex-dividend date for Transurban Group, as the next dividend’s payable hits on 10 August 2018.
What is Transurban Group?
If you’re a fellow Melburnian, chances are you’ve heard the name. If not, they’re a Top 20 company on the ASX behind the dreaded road tolls.
Transurban manage and develop urban toll networks in Australia and the United States. They foster the development, operation, maintenance and financing of toll road networks. They’re a Melbourne-based company and have been active since 1996.
Why is their stock in decline?
In case you haven’t heard the news, earlier this month Uber was throwing around the idea of implementing an ‘air-taxi’ service — a system in which commuters can travel in a flying taxi — within the next two years.
Yep, you heard it right — a real-life transport system straight out of The Fifth Element. Talk about arriving in style!
Although, the aircraft is essentially more like a large drone, which will take off and land on various ‘skyports’ throughout the city. The vehicles will be piloted initially and will later become self-driven.
And the best part?
The prices are aimed to be just as affordable as standard trips as the concept gains traction and passenger numbers grow.
I think it’s safe to say that Uber is most definitely thinking ahead when it comes to cutting commute time.
Sydney and Melbourne are two of the cities tipped to be in the running for the trial, due to higher population and traffic levels.
Exciting news for Uber, but not so much for other companies a little closer to earth…
What does this mean for investors?
Although Uber aim to implement the flying taxi in the next two years, I believe we’ll continue to see on-road commuters for at least another 10 years.
That being said, it still hasn’t been a great year for the company.
Transurban Group has had a 12-month payout ratio of more than 200% of earnings, indicating the dividend is not well covered by earnings by any means.
They have traditionally been a reliable, stable income-generating stock. They produce a yield of 4.59% — high for infrastructure stocks, but still below the market’s top performers.
Like Uber is observing, Melbourne and Sydney are only becoming more and more populated — signifying that Transurban will be collecting more tolls in the future than it is today and will deliver higher dividends as a result.
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