Down 5% in 2 years, does the Transurban share price reflect the 2024-26 dividend forecast?

Are investors missing something with the Transurban dividend?

| More on:
Piggy bank at the end of a winding road.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It hasn't been a very pleasant two years for owners of the Transurban Group (ASX: TCL) share price.

Today, shares of this ASX 200 toll road operator are going for $12.90 each (at the time of writing). This time last year, you could have bought those same shares for $14.11. In March 2022, they were going for $13.58.

This means that Transurban shareholders have endured a loss of 8.6% over the last 12 months, and 5% over the past two years.

But most investors who buy shares of this toll road operator probably don't do so for the explosive capital growth opportunity. With its inflation-hedged contracts ensuring regular toll price increases, investors tend to flock to Transurban for steady dividend returns.

Indeed, the stagnant Transurban share price has ensured that this company today offers a compelling dividend yield of 4.77% (albeit without franking credits attached). So does the current Transurban share price reflect what this company might pay out in dividends over the coming year or two?

What kind of dividends will Transurban shares payout going forward?

Naturally, it's almost impossible to predict what kinds of dividends a company will pay out in the future before said company actually announces a payment. Remember, no company is under any obligation to fund dividends at a certain level, or indeed at all.

But Transurban's revenues (and thus dividend ability) are easier to predict than most, thanks to the predictability of traffic volumes.

So let's see what some experts think.

Just yesterday, my Fool colleague James covered the views of ASX broker Citi. Citi gave Transurban shares a buy rating, along with a 12-month share price target of $15.60. Citi partly based that on a prediction that Transurban would be able to fork out a total of 63 cents per share over the 2024 financial year, rising to 65 cents per share over FY2025.

If accurate, this would mean Transurban shares would be trading on a forward yield of 5.04% on that FY2025 figure.

CommSec projections largely agree with Citi's numbers too. The brokerage platform is pencilling in similar amounts in dividends per share over the coming year or two. CommSec has a total of 62.1 cents per share in dividend for FY2024, rising to 65.4 cents for FY2025 and 68.7 cents for FY2026.

It's hard to say for sure if the Transurban share price currently reflects these forecasts. But if they are accurate, I doubt any shareholder will complain.

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Happy young woman saving money in a piggy bank.
Dividend Investing

How to make $10,000 of passive income a year

Here's how to make the share market your own personal ATM.

Read more »

Blue chips with stock written on them.
Dividend Investing

2 ASX blue-chip shares offering big dividend yields

These businesses have a lot to offer income-focused investors.

Read more »

Woman laying with $100 notes around her, symbolising dividends.
Dividend Investing

How much dividend income does the average ASX investor earn?

It's an impressive amount!

Read more »

Person holding Australian dollar notes, symbolising dividends.
Dividend Investing

Which ASX 200 sector paid the best dividends in FY25?

We reveal the dividend returns of each of the 11 market sectors in FY25.

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Dividend Investing

Are CBA shares still a good buy today for passive income?

Looking to earn passive income from ASX dividend stocks? Here’s my take on CBA shares.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Dividend Investing

Where to invest $50,000 in ASX dividend shares

Let's see why these shares could help income investors build a strong portfolio.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

2 Australian stocks with ultra safe dividend yields

These businesses have paid consistently-growing dividends for decades.

Read more »

Happy man holding Australian dollar notes, representing dividends.
Dividend Investing

$500 buys me 233 shares in this 10%-yielding income stock!

Macquarie expects this stock to offer big yields.

Read more »