The sudden U-turn by Transurban, of toll road fame, in slashing its payout has copped a big fine from the market.

Certainly any infrastructure stock, especially one that owns or has an interest in most of the Sydney and Melbourne tollways and faces little natural competition, deserves to have its share price slashed if it's not paying a good yield/dividend.

But at least it's admitted that it can't go on borrowing more than it earns to keep up its payout. Distributions will depend on cashflow from now on.

It's a breakthrough that other infrastructure companies - and, for that matter, listed property trusts - will be forced to follow.

Even so, that doesn't alter the fact that Transurban will be neither a yield nor a growth stock for the foreseeable future.

If it clings on to its written down share price of around $5 then over the next year its diminished distribution will yield an unimpressive 5 per cent, albeit partly tax deferred.

Since infrastructure stocks trade in line with bonds, its price would need to drop to just $3.15 to produce a competitive yield of 7 per cent.

Brokers are surprisingly gung-ho about Transurban, which unlike some toll companies has proved adept at forecasting traffic flows, and think disappointed investors would have left the stock by now.

But there's not much growth around to make up for the yield deficiency especially considering the state of petrol prices.

Still it must be said that while fund managers aren't exactly falling over themselves to get the stock, the Canadian pension funds are.

One even paid a premium to the market price in Transurban's recent rights issue.

So perhaps Transurban is seen elsewhere as a takeover target, a prospect that would undoubtedly rev up its share price even in this market.

For its part Transurban sees opportunities overseas and, perhaps returning the favour, is bidding for a project in Canada.

It also seems to be eyeing off ConnectEast which runs Melbourne's newly opened Eastlink.

Back home it might grab the troubled Lane Cove tunnel in Sydney. But it also faces a threat to its M2 from the NSW Government's plan to build a north-west metro line some time this millennium.

Those shareholders who haven't deserted it will be rewarded with the chance to buy $5000 of shares at a 2.5 per cent discount.

Frankly for a decent yield you'll get a better short-term return by sticking your money in an online bank account.

Advanatages

Inflation-proof

Predictable cashflow

Overseas interest

Cutting costs

Disadvantages

High debt

Unknown distributions

Petrol prices

Sluggish outlook

Verdict

Well regarded by brokers for being well run, but will take some time to restore its credibility with shareholders.