Contact kicks off earnings season on a bright note

Grant Davies

The S&P/NZX 50 index gained 33.39 points, or 0.4 percent, to 9,210. Within the index, 28 stocks rose, 13 fell and nine were unchanged. Turnover was $92.3 million, with just four companies trading on volumes of more than a million shares.

Investors have set a relatively low bar for the local reporting season, predicting single-digit earnings growth across the majority of firms posting results. Dividends remain a key factor for investors as swap rates trade near record lows in an environment where the Australian and New Zealand central banks are considering cutting their benchmark rates to new lows.

Contact rose 1.6 percent to a four-year high $6.32 after reporting a 28 percent gain in earnings before interest, tax, depreciation, amortisation, and changes in financial instruments as its generation arm benefited from higher wholesale electricity prices. The board also declared an interim dividend of 16 cents per share, higher than the 15 cents payment predicted by Forsyth Barr analyst Andrew Harvey-Green, and changed the policy to paying 100 percent of operating cash flow.

"We're kicking off earnings season on a positive note," said Grant Davies, an investment adviser at Hamilton Hindin Greene. "It's was a pretty solid result and then the cherry on top is the good bump in the dividend."