Are Transurban shares a top passive income buy in August?

Transurban Group (ASX: TCL) is one of the most popular options for Aussie income investors.

But with its shares trading around $14.59, would I buy them for passive income in August?

An attractive infrastructure business

Transurban operates 22 toll roads across Melbourne, Sydney, Brisbane, and the Greater Washington area in the United States.

Population growth, employment, freight movements, and increasing congestion have been supporting demand for its roads over the past decade.

You only need to look at its latest numbers to see this. Average daily traffic reached 2.6 million trips during the first half of FY26, representing growth of 2.5%. The company also completed major projects including Melbourne's West Gate Tunnel and the northern extension of the I-495 Express Lanes in the United States.

I like that Transurban can grow through several routes. More vehicles can use its existing roads, toll prices can increase under concession arrangements, and completed developments can begin contributing revenue and cash flow.

The company can also widen or improve established roads where growing traffic creates a need for additional capacity.

What passive income could investors receive?

Transurban expects to pay an FY26 dividend of 69 cents per share.

Assuming it at least holds firm and pays the same next year, at the current share price, that represents a forecast dividend yield of approximately 4.7%.

This means that a $20,000 investment, which could purchase around 1,370 shares before brokerage, could generate approximately $945 in dividends.

The payments are generally unfranked, which is an important difference from the dividends offered by many Australian banks and retailers. But I still think the income looks attractive.

What does the toll reform deal mean?

The recent agreement with the New South Wales Government removes some uncertainty surrounding Sydney's toll roads.

The proposed changes include lower toll prices on several motorways, a permanent weekly toll relief scheme, a new motorcycle toll class, and changes to truck pricing.

Transurban and the government are also working towards an expansion of the M2 and M7, which could improve traffic flow and create additional capacity.

The reforms remain subject to final agreements, approvals, and financing consents. I think the current package appears to balance relief for motorists with protection for the substantial investment already made by Transurban and its partners.

Regulation will remain an ongoing consideration because toll roads affect household budgets and can attract political attention.

In addition, debt is something to watch. Infrastructure requires substantial capital, and higher funding costs can reduce the cash available for distributions and new projects.

But with 88.6% of its debt hedged at the first-half result, with an average Australian-dollar cost of 4.6% and a weighted average maturity of 6.9 years, I think this leaves its balance sheet in a strong position.

Foolish takeaway

I think Transurban shares could be a strong passive income buy in August.

The forecast dividend yield is attractive, the distribution is growing, and its roads serve cities where population and transport demand should increase over time.

Investors still need to consider debt, regulation, project execution, and the possibility of weaker traffic during an economic downturn.

But at around $14.59, I would be comfortable buying Transurban as a long-term infrastructure holding and collecting its distributions while the wider road network continues developing.

The post Are Transurban shares a top passive income buy in August? appeared first on The Motley Fool Australia.

Motley Fool contributor Grace Alvino has positions in Transurban Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2026