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
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
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
''Overall, results generally exceeded expectations, driving a
useful lift in market indices. Obviously, there were
disappointments, but these were outweighed by positive
Given the challenging Australian economic environment and
restrained commodity prices, expectations were not onerous,
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.