The future of AZJ, page-73

On some site called 'Livewire', two analysts from Investors Mutual and Plato Investment Management discussed five higher yield stocks. AZJ was the only one that both suggested was a 'buy'. I don't pay much attention if any to analysts as too often, it's all about lining their own pockets, and sometimes they're not as well informed as one might think.

For instance, AZJ has rail operations in WA that rarely receive any media attention but AFAIK do quite well. It's not just a Queensland and Hunter Valley NSW rail operator hauling coal.

Aurizon Holdings (ASX:AZJ), trailing yield 7.12%

James Marlay: Well, I guess somewhat related to the boom in commodity prices is Aurizon, transport, infrastructure. Nice yield over 7%. Buy, hold, or a sell?

Peter Gardner (BUY): It's a buy for us. It's also been challenged in the last year, mainly through the move away from coal, and particularly after China's export ban on Australian coal (Aurizon transports coal from the mines to the ports). And so it's come under a lot of pressure from that. However, we just think with the amount of coal power plants that are being built in Asia, that that'll take a bit longer to play out than people expect. And so the yield is just too high and the value is too good for us to look past it.

James Marlay: All right. Do you see the same juicy value in Aurizon? Is it a buy, hold, or a sell?

Michael O'Neill (BUY): It's a buy. Completely agree with everything Peter said. I mean, the yields at about 7%. 60% of their business is regulated, they do have an ongoing market buyback. 40% is unregulated, the haulage services under 10-year contracts are some of the lowest-cost coal producers. Certainly, falling coal volumes is not a good thing for Aurizon, but there are a lot of mitigating factors under their take or pay contracts.

James Marlay: Well, our two guests don't agree on everything, but one thing is for sure, you're going to find better than 0.1% income if you go looking for some dividends in the equity market.