Is Atlas Arteria (ASX: ALX) the best ASX dividend share? It just released its update for June 2020.
What is Atlas Arteria?
Atlas Arteria Group is a global operator and developer of toll roads. It currently has a market cap of around $6.5 billion. The selling point of toll roads is that they can reduce travel time, make travel time more certain, reduce fuel consumption and carbon emissions.
The Group owns 25% of APRR in France and the smaller ADELAC business which connects to APRR, together comprising a 2,318km motorway in east and south east of France. APRR is France’s second largest toll road network and Europe’s fourth largest motorway group.
In the US, Atlas Arteria owns 100% of the Dulles Greenway, a 22km toll road in Virginia. In Germany, it owns 100% of the Warnow Tunnel in the north east city of Rostock.
June 2020 update
The toll road operator said that its traffic and revenue in the second quarter of 2020 were affected by the COVID-19 lockdowns. However, numbers recovered materially as the quarter progressed, particularly in France and Germany, where traffic in the final complete week of the quarter was down only 15.1% and 4.8% respectively compared to 2019. Traffic in these markets in the final week of the first quarter was down 79.3% and 42.4% respectively.
Its (weighted average) traffic was down 30.9% in the first half of 2020 and down 51.2% in the second quarter. Atlas Arteria toll revenue was down 26.1% in the first half and down 44.2% in the second quarter.
Dulles Greenway traffic was still down more than 50% in the final week of June 2020. Since the easing of lockdown restrictions, there has been a recovery in traffic, but Atlas Arteria said that the more severe COVID-19 case load and inconsistent application of lockdown measures in the region may have slowed the recovery. However, it has around US$203 million of cash on hand so it is “well positioned”.
Is it the best ASX dividend share?
Before COVID-19 the toll road business was steadily growing and the distribution was increasing as well. But with the delay of paying distributions and the need to do a $400 million placement/capital raising, I think Atlas Arteria is less defensive than many people may have originally thought. However, if traffic returns to normal in 2021 then it could be a decent buy.
I believe there are more defensive, better ASX dividend shares out there like WHSP (ASX: WHSP) which I wrote about here.
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