Is the Transurban Group (ASX: TCL) share price still a buy for ASX dividend income?
Transurban is a company that has amassed a reputation as a strong dividend payer in the past few years. Investors have been attracted to the perceived bond-like steadiness of the dividends Transurban pays out, which I think partly explains why the TCL share price has ballooned by 82% over the past five years.
In fact, the Transurban share price has today made another new all-time high of $16.39. So at these levels, is this steady-as-she-goes company still a good option for dividend income?
Why the Transurban share price is at an all-time high
As mentioned above, Transurban has developed a reputation as a 'safe' dividend payer, which is like catnip for income investors in this low interest rate environment we currently find ourselves in.
Transurban owns and operates toll-roads across Australia and North America – which as an asset that provides a slow-but-steady stream of cash flow to the company that is highly resistant to recessions and other kinds of economic shocks.
It's this stream of defensive earnings that investors want a piece of.
Is Transurban a buy at this all-time high share price?
Well, in my opinion, that depends on how badly you as an investor need a reliable dividend. Transurban (in my opinion) is not cheap at these prices, no matter what lens you look through. The company is trading on five times its book value and a laughable 190 times its earnings (although this metric has been somewhat skewed due to some earnings adjustments).
On current prices, you can expect a trailing dividend yield of 3.74% for Transurban shares – which is solid but really isn't too impressive compared with some other ASX dividend shares out there.
Whilst I do think this dividend is relatively 'safe' when comparing alternatives, it's worth noting that no ASX dividend can ever match the certainty of a bond or term deposit. The company can always trim this dividend with very little notice. I'm not saying this is likely, but it is still a possibility.
Foolish takeaway
I think Transurban is one of the more reliable ASX dividend shares out there today, but for me personally, it doesn't represent good value for money at the current price. I understand that investors are desperate for a 'safe' yield in today's market, but just bear in mind that that 'safety' comes with a hefty price tag right now.
