The Transurban Group (ASX: TCL) share price is down more than 1% after giving a quarterly update.
Transurban is Australia’s largest toll road builder, owner and operator.
Transurban September quarter update
The business gave investors a quarterly traffic update for the three months to September 2024.
During the quarter, average daily traffic (ADT) grew by 1.1%, averaging 2.5 million trips per day. I think traffic growth is key for the Transurban share price over the longer-term.
Traffic in Sydney grew by 1.9% because of an improvement in workday-related trips and heavy vehicles. All freight corridors in Sydney experienced growth in heavy vehicles, particularly the East/West route along WestConnex.
Melbourne traffic fell by 1.3% during the quarter, with Western Link experiencing the majority of the decline, partly because of continued construction works along Footscray Road and the West Gate Freeway as part of the West Gate Tunnel project works.
Turning to Brisbane, traffic increased by 1.3% during the quarter, supported by a 2.9% improvement of freight-related travel. The Queensland Government’s $0.50 public transport fare initiative was in operation during the period, with a marginal impact on traffic to date.
North American traffic continued to grow, with traffic increasing by 6.5%. The 95 Express Lanes traffic increased by 11.6%, supported by the Fredericksburg extension, which now represents 20% of all 95 Express Lanes trips. Average daily traffic on the 495 Express Lanes increased 8.9% due to improved economic activity in the region.
Management commentary
The Transurban CEO Michelle Jablko said:
While parts of Sydney and Melbourne are being impacted by construction, once complete we expect to see benefits in the form of enhanced travel time savings and improved network traffic flows.
This supports our FY25 distribution guidance of 65 cents per security, which our Board has reaffirmed today.
We continue to look for ways to remove complexity and generate further efficiencies in the way we operate. In addition, we are working on a number of opportunities that position us to grow both in existing and new markets.
Final thoughts on the Transurban share price
From Transurban’s point of view, it’s good to see that traffic on its toll roads keeps rising. Combined with inflation of tolls, this is helping increase revenue and earnings.
The business is expecting to pay a distribution of $0.65 per security, which currently represents a distribution yield of around 5%. With the prospect of lower interest rates on the horizon, I think this could be a good time to invest in the toll road operator.
There are other ASX dividend shares that could also be appealing right now.
