Did the low interest rates boost the appeal of 10 NZX dividend stocks?

Summary

  • Dividend stocks are usually well-established firms with a good track record of earnings distribution.
  • Investors need to diversify their portfolio with dividend stocks to get a steady income stream and maintain risk balance.
  • Dividend payers gain even more importance amid low interest rate environment.

Dividends are a common way for companies to reward their shareholders. Dividend-paying stocks can provide long-term and frequently higher dividend yields, as well as the prospect of capital gain and dividend growth.

As liquidity grows and real interest rates fall, dividend yield companies become more appealing. In a time of record low interest rates, dividend payers become even more important.

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Companies in industries with the greatest debt loads, such as utilities, telecommunications, and real estate investment trusts, often have the highest dividend yields. This is because if interest rates are falling, a firm with high debt load will not have to pay lower debt costs due to lower interest. The case will be opposite in the case when interest rates are rising.

ALSO READ: What are dividends? How do dividends work in New Zealand?

Amid this backdrop, let’s skim through the performance of these 10 NZX-listed dividend stocks.

Spark New Zealand Limited (NZX:SPKASX:SPK

Spark NZ is NZ’s telecom giant. The firm experienced steady growth for H1FY21 with an EBITDA of $502 million and clocked in 3.9% growth in its mobile data revenue.

The Group also extended the appointment of Ana Wight as the Future Director of the company for 5 more months until 31 December 2021.

The firm paid an interim dividend of 12.5cps on 9 April. It also revised its dividend guidance  to the top end of the range at 25 cps.

On 16 July, SPK ended the trading session flat at $4.79.

Genesis Energy Limited (NZX:GNEASX:GNE)

Genesis, a NZ-owned energy firm, has used NZ$35 per tonne fixed pricing option to satisfy its carbon obligations under the Emissions Trading Scheme for the year 2020. As a result, the Company's carbon expenditure is expected to increase by almost NZ$27 million over the previous year.

DO READ: How NZX dividend stocks are managing healthy payouts amid low-interest rate scenario

The Group paid dividend of $0.086 per share on 1 April 2021.

On 16 July, GNE ended the trading session at $3.46, down 2.54% from its previous close.

Trustpower Limited (NZX:TPW) 

Trustpower, a NZ-based prominent electricity generator and electricity retail company, released its quarterly operating report for Q1 2022. The Group reported that national storage recovered over the quarter, up 85% of average while wholesale electricity prices have stayed strong.

Fibre users accounted for an all-time high of 82% of all broadband connections, with 98% on medium and fast speeds. The number of mobile connections increased significantly, reaching over 9,000 in the quarter with customer preference for digital engagement.

Trustpower will pay an interim dividend of 17 cps on 18 July and a special dividend of 1.5 cps, for a total payout of 35.5 cps in 2021.

On 16 July, TPW ended the trading session at $7.98, down 1.48% from its previous close.

Scales Corporation Limited (NZX:SCL)

Scales Corporation, an essential services provider to the primary sector of NZ, witnessed a strong performance in 2020. It recorded sales worth $470.7 million due to its diversified approach towards agribusiness with a revenue of $470.7 million.

Scales paid a final cash dividend of 9.5 cps for FY20 on 9 July, taking total cash dividend for the financial year at 19cps.

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On 16 July, SCL ended the trading session at $7.98, down 1.48% from its previous close.

Contact Energy Limited (NZX:CENASX:CEN)

Contact Energy, a sustainable energy generator and retailer, involved in supplying natural gas, electricity and LPG.

Contact paid an interim dividend of 14cps on 30 March 2021.

On 16 July, CEN ended the trading session at $8.35, up 1.58% from its previous close.

Kiwi Property Group Limited (NZX:KPG)

Kiwi Property, an REIT that owns many properties across NZ, operations were affected by COVID-19.  COVID-19 related rent abatement costs caused decrease in net rental income and adjusted Funds from Operations (AFFO) in FY21. However, the drop in property values recorded in March 2020 has been partially reversed.

The Group plans to rebalance its portfolio, pursue its value creation strategy and progress with its build-to-rent model.

KPG paid a total cash dividend of 5.15cps in FY21 with FY22 cash dividend expected to be no less than 5.3cps.

On 16 July, KPG ended the trading session at $1.195, up 0.84% from its previous close.

Chorus Limited (NZX:CNUASX:CNU )

Chorus Limited, a telecom infrastructure provided in NZ, released its Q4 update on 12 July. It declared that the total fixed-line connections dropped by 16,000 to 1.34 million while total broadband connections decreased by 1k to 1.18 million. While fibre broadband connections rose by 29k during the period.

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CNU paid an interim dividend of 10.5 cps on 13 April.

On 16 July, CNU ended the trading session at $6.3, up 2.44% from its previous close.

Australia and New Zealand Banking Group Limited (NZX:ANZASX:ANZ

ANZ, a banking and financial services group, announced an outstanding NPAT of NZ$ 930 million for the half-year ended 31 March 2021, backed by a robust home-lending market.

DO READ: What are the top 10 NZX-listed financial companies?

The Company paid an interim dividend of 70 cps to its shareholders on 1 July.

On 16 July, ANZ ended the trading session at $29.02, down 0.82% from its previous close.

Westpac Banking Corporation Limited (NZX:WBCASX:WBC) 

Westpac, Australia’s oldest banking service provider, recorded a statutory net profit of $3,443 million for H1 of FY21, boosted by better asset quality and a brighter economic prospects.

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On 25 June, WBC paid an interim dividend of 58 cps to its stockholders.

On 16 July, WBC ended the trading session at $26.33, down 1.02% from its previous close.

Z Energy Limited (NZX:ZEL)

Z Energy, NZ-based fuel distributor, achieved a record NPAT of NZ$57 million in FY21, thanks to a systematic decrease in structural expenses and the optimization of its core business.

ALSO READ: Are these 10 NZX growth stocks all set to grow further in 2021?

On 2 June, ZEL paid a dividend of 14 cps to its stockholders.

On 16 July, ZEL ended the trading session at $2.83, up 1.43% from its previous close.

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