Market close: Telecom’s yield appeals and SkyCity gains ahead of AGM
BUSINESSDESK: New Zealand shares rose as investors were drawn to stocks with relatively appealing dividend yields such as Telecom and Restaurant Brands. SkyCity Entertainment Group rose ahead of its annual meeting.
The NZX 50 Index rose 24.48 points, or 0.6%, to 3965.18. Within the index, 39 stocks rose, seven fell and four were unchanged. Turnover was about $111 million.
Telecom, New Zealand's largest listed company, gained 1.5% to $2.435. It has a dividend yield of 12.5%, based on its payments over the past 12 months.
"The market continues to be well supported by people seeking a higher yield," says Shane Solly, portfolio manager at Mint Asset Management.
Chorus, the telecommunications network which demerged from Telecom last year, increased 2% to $3.50. Restaurant Brands, the fast-food company, gained 2.5% to $2.48
Shares in Contact Energy fell 0.8% to $5.31, erasing an earlier gain that followed comments from chairman Grant King.
He hinted at the possibility of a capital return or higher dividends to shareholders as the electricity generator ends a five-year period of capital investment and looks to a future with large, uncommitted cashflows.
"Their underlying operating activity remains quiet challenging in New Zealand," he says. "That has probably capped people's enthusiasm."
AMP, the wealth management and insurance company, rose 1.4% to $5.81. SkyCity Entertainment Group, the casino operator in talks with the New Zealand government to build a convention centre in Auckland, rose 2.1% to $3.90 ahead of its annual meeting tomorrow.
Shares in Metlifecare rose 2.4% to $3 after the Auckland-based retirement village operator sold its Oakwoods village in Nelson for $29 million to a syndicate of South Island investors.
The sale is in line with its portfolio rationalisation scheme and plan to focus on the North Island as part of its merger with Vision Senior Living and Private Life Care.
"It's appeared to realise its book value which is good to see. When you look at the stock price, however, people remain wary," Mr Solly says.
Rival Summerset Group rose 0.5% to $1.96. The Wellington-based the retirement village operator and developer is on the cusp of beating forecast annual sales of occupation rights after just nine months of the financial year.
Ryman Healthcare, New Zealand's largest retirement village operate, fell 0.5% to $4.10.
"Ryman has had a good run of late," Mr Solly says. "It's probably taking a healthy pause. It's a robust stock."
Fletcher Building, New Zealand's largest listed company, dropped 2.3% to $7.35.
Pacific Edge, the Dunedin-based DNA diagnostic test company, jumped 7.5% to 43 cents. It has completed work on its Pennsylvania-based laboratory on schedule and on budget and it now seeking regulatory approval for the building.
The stock has gained about 100% this year.