Close watch on share prices

Shares in some prominent New Zealand companies go ex-dividend this week, and a close watch is being kept on prices as brokers continue to gauge the strength of the market.

Among those going ex-dividend tomorrow are Air New Zealand, Auckland International Airport, Freightways, Heartland, New Zealand Oil and Gas, and Telecom.

Craigs Investment Partners broker Chris Timms said some weakness could be expected in the NZX this week as the shares went ex-dividend, but also that weakness could be short-lived given the strength of the market.

''Normally you expect the weakness to happen but, with such a strong market, the stock may not pull back. Or, if the share price does go back, it recovers very quickly. The stronger the market, the more likely that is to happen.''

More than half of the 30 companies that reported December results raised dividends, he said.

Eighteen companies increased dividends, while nine retained dividends at the same level as 2012. Only three dividends were lower than the previous corresponding period.

Mr Timms said the dividend growth was being driven by improved operating performance, strong balance sheets and a growing recognition from corporates of the demand for income and dividend growth from their shareholders.

''In our view, dividend growth remains a core theme for equity investors, especially given the low level of interest rates and the possibility of rising inflation in the medium term.''

While inflation might appear benign over the short term, there were identified risks over a three to five-year period that investors must remain conscious of, he said.

''Real assets, such as equities, remain the best protection against future inflationary risks.''

Craigs had reviewed the results of the recent reporting season and had selected 10 stocks that stood out for reporting a ''solid underlying performance'', Mr Timms said.

The were: Auckland International Airport, Ebos, Freightways, the NZX, Opus Consulting, Port of Tauranga, Sky Network TV, Steel & Tube, Trade Me and Vector.

''Together, we believe these stocks offer a good balance between an attractive current yield and the potential for solid dividend growth.''

The average forecast gross dividend yield for 2013 across those 10 stocks was 6% for 2013 and 6.7% for 2014. Additionally, Craigs analysts were forecasting dividends to grow by an average of 8.8% this year and 11.1% in 2014, Mr Timms said.

In Australia, the All Ordinaries Index rose 3.9% in February, while the All Ordinaries Accumulation Index rose 4.6%.

Morningstar Equities head of equities Peter Warnes said the accumulation index was a better indication of the December reporting season as some heavyweights, including Commonwealth Bank, Wesfarmers and Woodside, traded ex-dividend before February 28.

''Overall, results generally exceeded expectations, driving a useful lift in market indices. Obviously, there were disappointments, but these were outweighed by positive results.''

Given the challenging Australian economic environment and restrained commodity prices, expectations were not onerous, he said.

Meaningful revenue growth was difficult to achieve and management needed to focus on cutting costs to ensure cash flow was maintained.

Resource companies cut capital and exploration expenditure. Several projects were reduced, postponed, delayed or cancelled, Mr Warnes said.