We’ve said a number of times over recent weeks / months that not all stocks / sectors are moving as one with the underlying index and this is indeed unfolding with some of the defensive names that you’ve mentioned:
Atlas Arteria (ALX) : Infrastructure developer and toll road operator ALX has remained ~$8 while yielding an Est ~5.8% over the next 12-months – it pays 23c fully franked later this month. At the end of August they handed down a strong 1H22 result with toll revenue post COVID exceeding expectations which flowed down to ongoing excellent dividend flow into 2023, they’re simply performing well operationally.
Transurban (TCL) : This toll road operator has trended sideways since mid-2020 demonstrating all of the characteristics of a classic defensive name. FY22 numbers were largely inline however their guidance was weaker than we thought / hoped and that has flowed through to a weaker dividend for the year ahead but as a true defensive play the stocks remained fairly steady.
APA Group (APA) : This natural gas infrastructure company has struggled since making fresh highs in August, its corrected-15% following FY22 results which were inline with expectations today but this is a stock priced on distributions and the guidance for FY23 was ~3% below consensus, also we feel the announced departure of CEO Rob Wheals was a negative. While we view APA Group as a high-quality infrastructure company, we think their $1.4bn organic growth pipeline out to 2025 will become more challenging as rates rise, and the best in terms of APA’s share price may well be behind it.
We recently sold out of APA Group in our Income Portfolio.