There's not much worse than driving in peak-hour traffic.
But investors in Transurban Group (ASX: TCL) are laughing all the way to work each morning.
You see, Transurban is the toll-road king here in Australia.
It provides a faster road option than previously existed, while saving the government money. And drivers are willing to pay for that valuable time saving.
Like Sydney Airport Holdings Pty Ltd (ASX: SYD), this company has monopoly-like qualities.
Transurban develops, manages and maintains toll-road networks in Melbourne, Sydney and Brisbane. The company has also expanded to the United States and recently Canada.
It targets relatively affluent cities which are badly congested and expected to have strong traffic increases over time, due to population growth and increased demand for road freight transport.
While toll-road operators are sometimes seen as the bad guy, these roads make our cities much more efficient, generating billions of dollars of savings in the economy.
Performance
As you might imagine, Transurban is somewhat of a cash machine.
Once the hugely expensive road is built and becomes operational, the income starts pouring in.
Over the last 10 years, shareholders have received a total return of 13.3% per annum.
After moving to a more sustainable distribution policy in 2009, distributions have grown by almost 11% per year on average.
Future Growth
The growth story is underpinned by toll increases, which are contracted to rise with inflation at a minimum, in most cases more.
I think further acquisitions can be expected over time, in cities that meet its investment criteria.
On top of that, increasing traffic numbers and population growth will be a handy boost to the bottom line.
The company also has major projects underway like the West Gate Tunnel Project in Melbourne, expected to be completed in 2022, and the opportunity for road extensions and upgrades to its current network.
Foolish takeaway
Transurban looks set to benefit from increasingly populated and congested major cities.
The company does carry a fair amount of debt, which means as interest rates steadily rise, this could dampen the growth rate.
At the time of writing, the current dividend yield is around 4.8%, partly franked.
With the share price down 10% from its high, this could be a decent entry point for investors looking for a solid and growing income stream.
If you prefer to avoid companies with debt, there's plenty of other quality stocks out there for dividend investors.
