Sydney Airport Holdings Pty Ltd (ASX: SYD) has released its monthly traffic performance for June 2019, is it a buy for income?
Sydney Airport Holdings is the company that operates the Kingsford Smith Airport, it currently has a 99-year lease on the airport but it will revert back to government ownership at the end of this century. According to Sydney Airport, it generates $30.8 billion in economic activity a year, which is equivalent to 6.4% of the NSW economy.
Sydney Airport’s June 2019 Traffic
The airport operator revealed that in June its domestic passengers fell by 1.6% compared to June 2018 to 2.096 million. However, international passengers grew by 1.1% to 1.306 million. Sadly that still meant that total passengers for the month declined by 0.5% to 3.4 million.
In the year to date, domestic passengers are down 1.5% to 13.3 million, international passengers are up 1.9% to 8.3 million and total passengers are down 0.2% to 21.6 million.
Sydney Airport CEO Geoff Culbert said: “Sydney’s top five fastest growing passenger groups over the month were Vietnam, Taiwan, Japan, USA and India, all recording double digit growth compared to June 2018.
“Domestic passengers numbers were impacted by capacity reductions combined with subdued load factors.”
Of the countries mentioned, I think the USA passenger growth of 11.7% and Indian growth of 11.3% are the most important because both of them already represent two of the top six nationalities travelling through Sydney Airport.
Is Sydney Airport A Buy For Income?
Sydney is lauded as an income share because it regularly increases its shareholder payment and currently offers a trailing income yield of 4.8%.
Whilst Sydney Airport can increase revenue in some areas by increasing prices, I think the long term prospects of Sydney Airport are highly linked to the growth of passenger numbers to give operating leverage.
Therefore, with total passengers continuing to decline, I certainly don’t think it’s good value to buy today, despite today’s lower interest rates. I’d much rather buy one of the reliable shares in the free report below instead for growing dividends.
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