Unlike the situation in the United
States and Europe, New
Zealand companies more often
than not pay out a significant proportion of their earnings as dividends.
Consequently, investing in New
Zealand feels rather like
the “good old days” for many international investors. Investing long term for the dividend income
used to be the predominant reason that international investors got involved in
shares. But around 1970 the focus became capital growth, a focus that has
remained predominant internationally to this day.
One of the good things about New
Zealand shares is that
paying out a high proportion of earnings to investors has not prevented capital
growth. Some of the biggest dividend
payers, like banking, utilities and telecommunications groups, have experienced
significant growth over the past few decades. They are still doing so. Thus,
you could claim – as many experts do - that investing in major New
Zealand shares gives you the
best of both worlds: great earnings potential plus capital growth.
Strong dividend payments in New
Zealand have, in fact,
regularly gone hand-in-hand with strong earnings growth. Consequently, although the NZX hasn’t always
performed quite as well as its U.S. equivalent, in percentage terms New Zealand
investors who re-invested their earnings would have had just as good a return,
and in many cases a rather better one, than their overseas counterparts.
Many New Zealand
investors, too, overlook the impact that dividends have on their portfolios.
When the stellar growth in percentage terms that we’ve seen over the past 5
years slows, as it eventually must, good dividends will contribute greatly to
the continued performance of those portfolios.
In short, for many, New
Zealand could well represent
a ‘Back to the Future’ opportunity. It should certainly not be overlooked when
selecting a share market in which to be involved.
About the Author
Luigi
Wewege is CEO of Vivier
& Co
a boutique Financial Service Provider, registered in New Zealand.
Vivier & Co
Vivier and Company Limited (‘VCL’) is
incorporated and registered as a Financial Service Provider (‘FSP’) in New
Zealand, whose Financial Markets Authority supervises all FSPs. Additionally,
VCL belongs to a Government approved Dispute Resolution Scheme. VCL maintains a
Bankers Blanket Bond with Standard and Poor's A+ rated insurers, providing a
NZD2,000,000 indemnity on any one claim/loss in the aggregate.
For
further details, please contact
