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Smaller dividends drag down local firms

NZ NewswireNZ Newswire 23/08/2016 Paul McBeth

New Zealand shares were mixed as dividend payments weighed on investors' minds, with smaller payments from NZ Refining and Comvita dragging down those stocks and a bigger payment for Fliway Group stoking demand for the logistics company.

The S&P/NZX index increased 5.17 points, or 0.1 per cent, to 7,467.33. Within the index, 27 stocks gained, 19 fell and five were unchanged. Turnover was $155.4 million.

New Zealand's stock market has been trading near record highs as investors in search of yield are drawn to the country's relatively high dividend paying shares in a world where interest rates keep a lid on investment income. That dynamic has seen companies rewarded for increasing their dividend payments, or punished for trimming their returns.

New Zealand Refining shares dropped 7.8 per cent top $2.36 and Comvita fell 6.6 per cent to $9.89 after the two companies trimmed their dividend payments from a year earlier when reporting their earnings. In the case of NZ Refining, falling refining margins were expected with the global overhang of oil, and the interim dividend of 3 cents per share was more than what Forsyth Barr was expecting, while Comvita cut its dividend payout ratio to reinvest earnings into growth opportunities.

"If the dividends aren't there, investors can punish a stock somewhat," said Grant Williamson, a director at Hamilton Hindin Greene in Christchurch.

Meantime, Fliway jumped 14 per cent to $1.08.

Spark fell 2.5 per cent to $3.90.

A2 Milk led the benchmark index higher, up 2.7 per cent to $2.30 after announcing an extension to its supply arrangements with Synlait Milk. Synlait shares increased 0.8 per cent. Fletcher Building, which met guidance when posting earnings last week, gained 1.7 per cent to $10.71.

Mercury NZ rose 1.6 per cent to $3.09 after the power company after reporting a 2.3 per cent increase in operating earnings. Meridian Energy rose 0.5 per cent to $2.945 and Genesis Energy increased 0.9 per cent to $2.27 before they report their respective earnings on Wednesday.

Serko climbed 13 per cent to 68 cents after the online travel booking software developer entered into a deal with Nasdaq-listed Sabre Corp which will deliver at least an extra $1 million in annual revenue to the New Zealand firm.

Fisher & Paykel Healthcare fell 0.6 per cent to $10.21, Tourism Holdings fell 0.7 per cent to $3.02 and Kiwi Property Group fell 1 per cent to $1.555.

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