Investing in infrastructure stocks can be a lucrative way for Australian investors to tap into sectors like energy and transportation. But because of government intervention, the pace of infrastructure growth can be uncertain.
What are infrastructure stocks?
Infrastructure stocks are tied to companies and organizations responsible for providing essential services to cities and facilitating the transportation of goods and people. Look at it as the underlying grid that keeps an industrial economy running.
With that said, infrastructure stocks provide exposure to a swath of different companies and sectors. Here are some examples of industries and companies involved in infrastructure:
Mass transit
Water supply
Sewage management
Roads and bridges
Electric companies
Telecommunication systems
Oil rigs and refineries
Waste disposal
But infrastructure goes even deeper than that. The above industries are what’s known as hard infrastructure. Soft infrastructure, on the other hand, comprises industries that deliver specific services to people in the communities they serve. Here are some examples:
Financial institutions
Education systems
Law enforcement
Governmental bodies
Agriculture
Healthcare systems
You can also find infrastructure stocks in the tech space, specifically within information technology. Companies that make servers and other networking equipment essential for the transfer of data are part of the infrastructure industry. They build equipment that’s essential to how many businesses operate and communicate.
Infrastructure is a vast industry that affects several aspects of our everyday lives. And the players in this industry are equally diverse. They include private companies, government agencies and public/private partnerships.
Why invest in infrastructure stocks?
Many Australian investors turn to infrastructure funds because these investments tend to be less volatile than other types of equities in the long run. Historically, these have generated high yields and have remained less responsive to interest rate fluctuations than other investments.
Moreover, global infrastructure investments have outperformed equities by almost 1% and bonds by nearly 4% since 1976. According to the World Economic Forum, worldwide infrastructure investment is projected to reach $US 79 trillion by 2040.
Moreover, infrastructure is also essential to any modern, functioning economy. Companies need roads to transport goods and fuel to move goods around. People require electricity, heat, water and waste removal to live comfortable lives.
Infrastructure makes all this possible. And its operations also spur job creation.
Risks of investing in infrastructure
Because so many infrastructure projects are essential to modern economies, governments tend to take some control. Political disagreement over how to manage certain projects can have a strong impact on infrastructure investments.
For instance, President Donald Trump announced in 2019 his Administration’s plan to invest nearly $US 1 trillion in infrastructure. But many of these efforts stalled in Congress over political tensions and concerns over the coronavirus.
The latter alone delivered a major blow to the infrastructure sector. Construction and commercial projects slowed or came to a halt as millions of people’s jobs were eliminated.
Infrastructure stocks
There are plenty of roads to invest in infrastructure in Australia. You can invest in various funds and individual stocks.
Company summary
Atlas Arteria Limited owns, develops, and operates toll roads. It holds a 31.14% of interest in the APRR and A79 and 31.17% interest in the ADELAC located in France; 100% interest in the Warnow Tunnel located in Rostock, Germany; 66.67% interest in the Chicago Skyway situated in Chicago and 100% interest in the Dulles Greenway located in Virginia, United States. The company was formerly known as Macquarie Atlas Roads Limited and changed its name to Atlas Arteria Limited in May 2018. Atlas Arteria Limited was incorporated in 2009 and is based in Melbourne, Australia.
APN Industria REIT (?Industria) (ASX code: ADI) is a listed Australian real estate investment trust which owns interests in office and industrial properties that provide functional and affordable workspaces for business. Industria's $824 million portfolio of 32 properties located across the major Australian cities provides sustainable income and capital growth prospects for security holders over the long term. Industria has a target gearing band of 30 ? 40%, providing flexibility for future growth without compromising the low-risk approach to management. Industria is managed by APN Property Group, a specialist real estate investment manager established in 1996, and governed by a majority independent Board.
Historical performance
Stock information
Market capitalization: $1046854656
P/E ratio: 6.3938
PEG ratio: 0
Dividend yield: 0.0527%
Company summary
Verbrec Limited primarily provides engineering, asset management, training, and infrastructure services to mining, energy, and infrastructure industries. The company offers asset management services, including maintenance and reliability engineering, asset integrity, operational readiness, and material and inventory management; and engineering and project delivery services. It operates in Australia, New Zealand, Papua New Guinea, and the Pacific Islands. The company was formerly known as LogiCamms Limited and changed its name to Verbrec Limited in December 2020. Verbrec Limited was founded in 1988 and is headquartered in Brisbane, Australia.
Historical performance
Company summary
Viva Energy REIT is Australia's largest listed REIT owning solely service station properties with a high quality portfolio of service stations across all Australian States and mainland Territories. Viva Energy REIT's objective is to maximise the long-term income and capital returns from its ownership of the portfolio for the benefit of all security holders. Viva Energy REIT is a stapled entity in which one share in Viva Energy REIT Limited (ABN 35 612 986 517) is stapled to one unit in the Viva Energy REIT Trust (ARSN 613 146 464). This ASX announcement is prepared for information purposes only and is correct at the time of release to the ASX. Factual circumstances may change following the release of this announcement.
Historical performance
Company summary
Villa World Limited develops and sells residential land in Australia. It operates through two segments, Property Development and Construction - New South Wales and Queensland, and Property Development and Construction - Victoria. The company also develops, constructs, and sells house and land packages. Villa World Limited was founded in 1986 and is headquartered in Broadbeach, Australia.
Historical performance
Stock information
Market capitalization: $294111904
P/E ratio: 13.0556
PEG ratio: 0
Dividend yield: 0.166%
Company summary
Unibail-Rodamco-Westfield is an owner, developer and operator of sustainable, high-quality real estate assets in the most dynamic cities in Europe and the United States. The Group operates 72 shopping centres in 12 countries, including 38 which carry the iconic Westfield brand. These centres attract over 900 million visits annually and provide a unique platform for retailers and brands to connect with consumers. URW also has a portfolio of high-quality offices, 10 convention and exhibition venues in Paris, and a "2.5 Bn development pipeline of mainly mixed-use assets. Its "50 Bn portfolio is 86% in retail, 6% in offices, 5% in convention and exhibition venues, and 2% in services (as at December 31, 2023). URW is a committed partner to major cities on urban regeneration projects, through both mixed-use development and the retrofitting of buildings to industry-leading sustainability standards. These commitments are enhanced by the Group's Better Places plan, which strives to make a positive environmental, social and economic impact on the cities and communities where URW operates. URW's stapled shares are listed on Euronext Paris (Ticker: URW), with a secondary listing in Australia through Chess Depositary Interests. The Group benefits from a BBB+ rating from Standard & Poor's and from a Baa2 rating from Moody's.
Sunland Group Limited develops and constructs residential properties in Australia. The company operates through two segments, Residential Housing and Urban Development, and Multi-Storey Development. The Residential Housing and Urban Development segment is involved in the land subdivision and medium density housing developments, as well as provides project services. The Multi-Storey segment develops and sells medium-rise projects between five and fifteen stories, and high-rise developments above fifteen stories. Sunland Group Limited was founded in 1983 and is based in Brisbane, Australia.
Historical performance
Stock information
Market capitalization: $9994430
P/E ratio: 0.3042
PEG ratio: 0
Dividend yield: 13.8356%
Company summary
Vicinity Centres (Vicinity or the Group) is one of Australia's leading retail property groups with a fully integrated asset management platform, and $24 billion in retail assets under management across 60 shopping centres, making it the second largest listed manager of Australian retail property. The Group has a Direct Portfolio with interests in 59 shopping centres (including the DFO Brisbane business) and manages 30 assets on behalf of Strategic Partners, 29 of which are co-owned by the Group. Vicinity is listed on the Australian Securities Exchange (ASX) under the code 'VCX' and has 24,000 securityholders. Vicinity also has European medium term notes listed on the ASX under the code 'VCD'.
Scentre Group owns and operates a leading portfolio of 42 Westfield destinations with 37 located in Australia and five in New Zealand encompassing more than 12,000 outlets. Our Westfield destinations are strategically located in the heart of the local communities we serve. Our centres are considered community hubs that connect people with services and experiences that enrich their daily lives. The Trust has a joint interest in 39 Westfield destinations.
Rincon Resources Limited engages in the acquisition, exploration, and development of mineral resources in Western Australia. It explores for gold, copper, and critical rare-earth elements. The company holds 100% interests in the South Telfer project that consists of 9 granted tenements and 3 tenement applications covering 566 square kilometers located in the Paterson Range region; the Laverton project that consists of 11 granted exploration tenements and 10 tenement applications encompassing 100 square kilometers located in the Laverton tectonic zone; and the Kiwirrkurra project that consist of 5 granted tenements and 1 tenement application covering 220 square kilometers located in the West Arunta region. The company was incorporated in 2018 and is based in Subiaco, Australia.
Historical performance
Stock information
Market capitalization: $6634530
PEG ratio: 0
Company summary
Peet Limited acquires, develops, and markets residential land in Australia. It operates through Funds Management, Company-Owned Projects, and Joint Arrangements segments. The Funds Management segment provides underwriting, capital raising, and asset identification services. The Company-Owned Projects segment acquires parcels of land primarily for residential development purpose, as well as produces non-residential blocks of land. The Joint Arrangements segment undertakes the development of land through joint arrangements with government, statutory authorities, and private landowners. Peet Limited was founded in 1895 and is based in Perth, Australia.
Historical performance
Stock information
Market capitalization: $559779584
P/E ratio: 10.8182
PEG ratio: 0
Dividend yield: 0.0462%
Company summary
Rural Funds Group is an agricultural Real Estate Investment Trust (REIT) listed on the ASX under the code RFF. RFF owns a diversified portfolio of Australian agricultural assets which are leased predominantly to corporate agricultural operators. RFF targets distribution growth of 4% per annum by owning and improving farms that are leased to good counterparties. RFF is a stapled security, incorporating Rural Funds Trust (ARSN 112 951 578) and RF Active (ARSN 168 740 805).
Historical performance
Stock information
Market capitalization: $755749824
P/E ratio: 8.8636
PEG ratio: 0
Dividend yield: 0.0602%
Company summary
LandMark White Limited provides property valuation and consultancy services in Australia. The company offers valuation and advice to patent owners and investors to assist in buying or selling property, family law settlements, mortgage/refinancing, family court property matters, stamp duty/capital gains tax, insurance replacement, municipal valuations, rental assessments, dispute resolutions, resumption and compensation, assessment of property portfolio, deceased estates/probate, feasibility analysis. It also provides professional and advisory firms to assist in family law settlements, deceased estates, probate, self-managed super funds, disputes and litigation, and forensic valuations. In addition, the company offers valuations for balance sheet reporting, asset valuations, rental assessment and determination, acquisition and disposal, feasibility, portfolio valuations, and going concern assessments. Further, it provides valuation advice for acquisition and disposal, asset reporting, portfolio financial reporting, tax depreciation, and mass appraisal ratings and taxing; valuation services to banks and financial institutions to support their mortgage lending activities in housing and residential investment markets; and services to government and developers to assist in project analysis, feasibility studies, due diligence, and advisory services. The company was founded in 1982 and is headquartered in Sydney, Australia.
Historical performance
Stock information
Market capitalization: $21795200
PEG ratio: 0
Dividend yield: 0%
Company summary
We are a leading creator and curator of connected communities with people at the heart of the places we create. For more than 70 years, we have built a proud legacy, helping more Australians achieve the dream of home ownership, and enabling the future of work and retail. Today, we continue to build on our history as one of Australia's largest diversified property groups to elevate the social value of our places, and create a tangible sense of human connection, belonging and community for our customers. We own, fund, develop and manage one of Australia's largest portfolios of residential and land lease communities, retail town centres, and workplace and logistics assets. Our approach is distinctive, bringing a unique combination of development expertise, scale, deep customer insight, and diverse talent - with care in everything we do. We are committed to contributing to the economic prosperity of Australia and the wellbeing of our communities and our planet.
Service Stream Limited designs, constructs, operates and maintains infrastructure networks in Australia. It operates through Telecommunications, Utilities, and Transport segments. The Telecommunications segment provides various operations, maintenance, installation, design, and construction services to owners of fixed-line and wireless telecommunication networks, including customer connections; service and network assurance; site acquisition; and design, construction, engineering, and installation of broadband, wireless, and fixed-line project services, as well as projects for asset remediation, augmentation, and relocation. The Utilities segment offers operations, maintenance, design, and construction services, as well as range of specialist metering, new energy, and inspection services to gas, water, and electricity network owners and other customers. Its services include asset upgrades and replacement; design, engineering, and construction services for network assets and energy-related products; and meter reading and network assurance, as well as specialist inspection, auditing, and compliance services. The Transport segment provides operational support and maintenance services to public and private road, and tunnel asset owners. Its services comprising road network maintenance, control room operations, minor civil construction services, and installation and operation of intelligent transport systems. The company was incorporated in 1996 and is headquartered in Melbourne, Australia.
Historical performance
Stock information
Market capitalization: $769941248
P/E ratio: 31.25
PEG ratio: 0
Dividend yield: 0.0324%
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Bottom line
Infrastructure helps industrial economies stay afloat. But because infrastructure networks can be very complex, there is uncertainty over which companies and industries will thrive.
Nonetheless, infrastructure investments historically have remained less volatile than other equities. Because infrastructure is vital to many economies, governments can play a large role in regulating certain sectors. That adds another layer of uncertainty.
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