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The Markets

Dividend yield stocks again dominate sharemarket trading

New Zealand shares extended their rally as the prospect of low interest rates maintained the appeal of companies with reliable dividends, such as Genesis Energy and Trustpower. Air New Zealand rose on plans to cut costs.

Thursday, March 28th 2019, 6:27PM

by BusinessDesk

The S&P/NZX 50 Index rose 67.3 points, or 0.7 percent, to a record 9,766.19. Within the index, 30 stocks gained, 15 fell, and five were unchanged. Turnover was $102.1 million.

Swap rates hit new lows today, following the Reserve Bank's unexpected adoption of a bias to cut the official cash rate. The low-rate environment continued to support the attraction of companies that pay reliable and sustainable dividends, such as utilities and property investors.

"Companies with predictable dividends that are resilient during periods when the economy's being challenged are all performing very well," said Mark Lister, head of private wealth research at Craigs Investment Partners. "That's what you'd expect given what we saw from central banks around the world and here yesterday."

Trustpower led the market higher, up 2.8 percent at $6.61 on a volume of 551,000 shares, almost 10-times the 63,000 three-monthly average. Genesis hit a record $3.22, ending the day at $3.195, up 2.4 percent on a volume of 948,000 shares, almost three times its 90-day average.

Meridian Energy increased 0.8 percent to $4.175 on a volume of 1.3 million shares. It shed rights to dividends of 7.94 cents per share. Vector fell 0.6 percent, or 2 cents, to $3.54 after shedding rights to an 8.25 cent dividend.

Lister said exporters typically benefit from the low rate environment devaluing the kiwi dollar and increasing the value of returns earned overseas.

Pushpay Holdings, which earns most of its revenue in the US, rose 1 percent to $3.10 on a volume of about 2 million shares, almost five-times it 405,000 average. A2 Milk was up 1.8 percent at $14.22 on a volume of 804,000. Mainfreight rose 0.6 percent to $35.90 on average volumes.

Scales Corp increased 1.9 percent to $4.89 on a volume of 248,000 shares, more than twice its average. , and Sanford increased 1.5 percent to $6.80 on typically light trading of 23,000 shares.

Chorus rose 2.3 percent to a record $5.90 on a volume of 186,000, smaller than the 559,000 90-day average. The network operator today pitched a price for retail broadband providers to attach their own electronics directly to the fibre network, a practice known as unbundling.

Spark New Zealand was the most traded stock at 2.4 million, less than half the usual trading. The shares increased by 0.1 percent to $3.82.

Air New Zealand rose 2.3 percent to $2.47 on a bigger than usual volume of 1.6 million. The national carrier today outlined plans to cut $60 million from its annual spending on top of $50 million of savings already flagged. It will also put off $750 million of capital spending to upgrade its fleet.

Lister said investors latched on to the positives in the review in that the airline is responding to a cooling transport and tourism market.

"The odds are still against Air New Zealand over the medium-term - the cycle is against them," he said.

Auckland International Airport, the country's biggest airport operator, fell 0.6 percent to $8.15 on a volume of 1.3 million shares. It hit a record $8.235 yesterday.

Sky Network Television was the weakest performer on the benchmark index, down 2.2 percent at $1.31 on a volume of 426,000 shares, less than half its three-monthly average. Former chief executive John Fellet unexpectedly left the board today, just over a month since handing over management to Martin Stewart.

Greg Smith, head of research at Fat Prophets said Fellet's exit was the right call and will give Stewart freeer rein in installing a new senior leadership team.

"The incumbent management team have stood by for years and watched massive disruption and destruction in shareholder value without lifting a finger and with an air of extreme complacency," Smith said. "They would only cramp Stewart’s style and he doesn’t need them chirping in his ear."

Mercury NZ fell from a record, down 1.4 percent at $3.875. The power company yesterday announced plans to start work on a $256 million wind farm in August.

Fletcher Building rose 2.5 percent to $4.95 on a smaller volume than usual of 648,000.

Tags: Market Close

« NZ shares surge as rate cut prospect buoys yield plays; Mercury, Meridian hit recordsNZX50 delivers 12% gain in March quarter as low rates spur demand for yield »

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ANZ 5.19 4.05 3.95 4.49
ANZ Special - 3.55 3.45 3.99
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ASB Bank Special - ▼3.55 ▼3.45 3.89
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BNZ - Mortgage One 5.90 - - -
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HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 5.15 3.18 3.18 3.20
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Last updated: 21 October 2019 9:16am

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