A Lens on NZX Dividend Stocks - THL, AIR, MEL, KPG

  • Apr 21, 2020 NZST
  • Team Kalkine
A Lens on NZX Dividend Stocks - THL, AIR, MEL, KPG

The COVID-19 pandemic has had a damaging effect on the world economy. At the time of writing, more than 2.4 million COVID-19 cases have been reported, and ~166k confirmed deaths. Attempts to contain the spread of this highly infectious virus has paralyzed the global economy, hitting the share markets all over the world. The consequences of the COVID-19 crisis on the economy turn out to be more apparent.

Due to this economic downfall, many individuals are looking more closely at dividend shares, either for durable businesses or for income, that has improved prospects in an exceptional monetary environment.

Dividend stocks are companies that pay out regular dividends, and these are usually well-recognized businesses having a history of distributing earnings back to stockholders.

Although dividends are mostly paid in cash and given to stockholders quarterly, some companies pay dividends unevenly or issue them in the form of shares, mutual funds, and exchange-traded funds (ETF).

In this article, we will discuss five steady NZX-listed dividend stocks that investors are keeping an eye on amid the current COVID-19-led recession - THL, AIR, MEL, KPG

Tourism Holdings Limited (NZX:THL)

New Zealand-based Tourism Holdings Limited is the largest provider of holiday vehicles for rent and sale across the world. The Company operates in New Zealand, the US, and Australia. In the US, the Company owns and operates the Sales brand and El Monte RV Rentals & Sales and Road Bear RV Rentals. Within New Zealand, THL manages Kiwi Experience along with the Discover Waitomo Group.

On 03 April 2020, the Company provided a general market update and mentioned that various appropriate measures were underway in response to the impact of the coronavirus infection.

Moreover, the Company disclosed that in New Zealand, Australia, and the US, its rental businesses are believed to be an ‘essential service’ for the aim of providing motorhomes for coronavirus-related usage. Tt international level, THL continues to offer its services to customers that are in lockdown situations.

Remarkably, the current facilities of Tourism Holdings provide for up to NZ$306 million (Current facilities comprise of NZ$190 million and US$70 million) of debt available. Moreover, the current net debt of the Company is noted to be nearly $200 million.

THL remains convinced that it will not violate its financial covenants in the fiscal year 2020 centred on the current anticipations, which are for minimum profits in the near-term.

Despite the Company being operational even in lockdown and generating revenue, THL cancelled its interim dividend payment on 20 March owing to the uncertainty concerning the coronavirus outbreak.

Outlook for FY2020:

  • The gross capital expenditure for the fiscal year 2020 is anticipated to be nearly NZ$133 million.
  • Total fleet sales proceed expected to be around NZ$129 million, approximately 6% up on the prior year.
  • Net capital expenditure is expected to be around NZ$4 million, due to the substantial reduction of capital expenditure in the US.

 

THL Outlook for FY2020

 

THL stock ended the day’s trade at NZ$1.380 on 20 April 2020, a decline of 2.13% from its previous close. The market cap of the Company stands at ~NZ$204.261 million. The P/E ratio of the Company stands at 7.570x, with a gross dividend yield of 11.860%.

Air New Zealand Limited (NZX:AIR)

Auckland-based, NZX-listed Company Air New Zealand operates a global network that offers domestic and international passenger and cargo services in New Zealand to nearly 17 million travellers per year. The Company operates its connection to London and through global alliance partners connects New Zealand to Europe and outside, with more than 3.4k flights.

Air New Zealand’s response for the COVID-19 pandemic:

  • Overall capacity declines of nearly 10% throughout the network.
  • Numerous labour initiatives that include a voluntary cut in pay of CEO, a suspension in hiring for all non-essential roles, as well as optional unpaid leave for operational employees.
  • Suspension of capital spending which is not essential and any other non-critical business activity.

 

Earnings guidance 2020 withdrawal:

The Company announced the withdrawal of the full year 2020 earnings guidance that was issued on 24 February 2020 and reconfirmed at the interim finding’s announcement on 27 February 2020. The Company mentioned that because of the enhanced uncertainty surrounding the time and severity of the COVID-19 outbreak it has suspended its earnings guidance.

AIR stock ended the day’s trade at NZ$1.390 on 20 April 2020, an increase of 6.1% from its previous close. The market cap of the Company stands at ~NZ$1.561 billion. The P/E ratio of the Company stands at 6.720x, with a gross dividend yield of 11.662%.

Meridian Energy Limited (NZX:MEL)

Listed on both the NZX and ASX, Meridian Energy is one of New Zealand’s largest companies engaged in generating and retailing electricity. Meridian Energy employs around 1k employees across Australia and New Zealand. The majority shareholder of the Company is the New Zealand government, with 51% of shares.

Monthly operating report for March 2020

  • The national hydro storage declined to 94% from 111% in the month to 9 April 2020, of the historical average.
  • COVID-19 lockdown has reduced the weekly requirement of energy in April 2020 by roughly 16% as compared to last year.
  • Retail sales volume for Meridian’s New Zealand in March 2020 were 14.7% higher as compared to March 2019.
  • Moreover, April 2020 is witnessing substantially lower business and sales. However, residential sales recorded to be higher.

 

MEL stock ended the day’s trade at NZ$4.450 on 20 April 2020, an increase of 1.83% from its previous close. The market cap of the Company stands at ~NZ$11.405 billion. The P/E ratio of the Company stands at 29.630x, with a gross dividend yield of 6.131%.

Kiwi Property Group Limited (NZX:KPG)

The largest diversified property company in New Zealand, Kiwi Property Group manages a portfolio of real estate comprising some of the best shopping centres and prime office buildings in the country. The Company is engaged in providing great places for individuals to work and shop for twenty-five years.

COVID-19 Business update

During the continuing disruption due to the COVID-19 pandemic, Kiwi Property provided the following business update:

During this unprecedented challenge, the Company is dedicated to safeguarding the wellbeing of its employees, tenants as well as customers. Moreover, the Company is also engaged in defending the long-term value of its shareholders.

KPG has a diversified real estate portfolio, including mixed-use, retail, office, and others. The assets of the Company are heavily weighted to the golden triangle, which is home to 50% of the population of New Zealand, with 71% of assets located in Auckland and around 8% in Hamilton. The Company has maintained a high-level occupancy of approximately 99% as well as a weighted average lease expiry of nearly five years.

On 17 April 2020, stock of KPG increased by 3.59% to NZ$1.010, with a market capitalization of almost NZ$1.5 billion. The P/E ratio of the Company stands at 11.060x, with a gross dividend yield of 9.087%.

KPG stock ended the day’s trade at NZ$1.010 on 20 April 2020, in line with its previous close. The market cap of the Company stands at ~NZ$1.585 billion. The P/E ratio of the Company stands at 11.450x, with a gross dividend yield of 8.772%.

   
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