EDHECinfra Paper
Anatomy of a Cash Cow

This paper examines how infrastructure companies differ from the rest of the economy and in particular whether or not they tend to pay larger and more frequent dividends i.e. whether infrastructure really is a ‘cash cow.’ We find that infrastructure companies exhibit key systematic differences with a sample of ‘matched’ firms that are otherwise comparable in size, leverage, revenue growth or profits. Infrastructure companies are different because they tend to exhibit high asset tangibility, asset illiquidity and asset inflexibility, as well as lower operating leverage, as measured by a range of well-established metrics founds in the academic literature. Finally, we find that infrastructure companies do pay higher (but not more frequent) dividends than other firms and that these higher payout ratios correlate well with the characteristics we have identified. We argue that using these characteristics provides an important robustness check to identify infrastructure assets.

EDHECinfra Publication
2020 (September)
infraMetrics® by EDHECinfra

DISCLAIMER

  • The information contained on the EDHECinfra website (the “information”) has been prepared by EDHECinfra® solely for informational purposes, is not a recommendation to participate in any particular investment strategy and should not be considered as an investment advice or an offer to sell or buy certain securities.

    The rest of this disclaimer can be read on the legal page of this website.

    The terms contained in this Disclaimer are in addition to the Terms of Service for users without a subscription applicable to the EDHECinfra® website, which are incorporated herein by reference.

    This site uses cookies to deliver the services you request, improve user experience and measure audience. By continuing to browse our website, you are consenting to our use of cookies. Find out more about this in our Privacy policy.

    SCROLL DOWN TO AGREE

  • X
    X
    X