Is the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price a buy for income?
Some investors might think so after the airport operator released its traffic performance for May 2019 last week.
If you didn't catch it, the business revealed that domestic passenger numbers grew 0.3% over the prior corresponding period and international passengers (which includes domestic on-carriage) increased by a pleasing 6.3%. In total, passengers grew by 2.4% in May 2019 compared to May 2018.
This was an impressive month considering many of the previous months this year had shown domestic passengers falling, which is why year to date domestic passenger numbers are still down 1.4% and total passengers are down 0.1%.
As I've been regularly pointing out about Sydney Airport, a lot of its revenue comes from the variable number of passengers that travel through each month. More passengers can have an increasingly positive effect on earnings, although it can work the other way as well.
In May 2019 the company saw Chinese passengers grow by 13.6%, USA passengers increase by 14.5% and Japanese passengers rise by 12.5%. It's good to see that passengers from wealthy countries continue to come to Australia in greater numbers as this will be a key component of whether the distribution can keep growing over the medium-term.
Foolish takeaway
Falling interest rates could help Sydney Airport over time, as it has a lot of debt on its balance sheet. It also makes the distribution look more attractive. It currently has a distribution yield of 4.6%. I suppose lower interest rates do justify the price somewhat, but I think it's too expensive for me to considering buying today. We can't ignore the risks, like the potential of falling passengers, just because of lower interest rates.
