SPK- Spark NZ (TELCO)

[Snoopy]

Thanks Snoopy, I didn't have time or inclination to go through in detail, but are you saying they pay out 100% of normalised earnings give or take?

I hope you have the time and inclination to take in this answer: "Yep"

SNOOPY

[RupertBear]

I hope you have the time and inclination to take in this answer: "Yep"

SNOOPY

[SailorRob]

I hope you have the time and inclination to take in this answer: "Yep"

SNOOPY

Thanks,

Well that explains everything. What an absolute disaster no wonder it has underperformed cash for 31 years.

How the hell do they expect to grow without retaining any earnings?

I see total assets has ballooned over the last decade while revenue has remained flat, yes the margins have improved a little but hell they have a LOT more assets at work.

Where did the funding come from for this huge asset build if they paid out all earnings?

Oh right, liabilities have increased 50%


Snoopy you should focus you attention on good businesses and out of NZ, a term deposit has given Spark a good run over multiple decade long periods.

[Baa_Baa]

Snoopy you should focus you attention on good businesses and out of NZ, a term deposit has given Spark a good run over multiple decade long periods.

SR, recall that term deposit rates returns have been terrible for many years until recently, and a share like Spark has been a reliable income for investors throughout that time, even now albeit not as attractive vs term deposits as it was for a long time.

I reckon it's as simple as that. NZX mum and dad investors seem to be biased towards regular reliable income, and in that regard SPK has delivered. I bet they don't give a second thought, or even know, how that dividend is created, just that it comes to them, reliably every six months.

There's a few other companies that our income focused NZX investors concentrate on, for the same reasons. Reliable sustained income, regardless of how that is achieved.

[SailorRob]

SR, recall that term deposit rates returns have been terrible for many years until recently, and a share like Spark has been a reliable income for investors throughout that time, even now albeit not as attractive vs term deposits as it was for a long time.

I reckon it's as simple as that. NZX mum and dad investors seem to be biased towards regular reliable income, and in that regard SPK has delivered. I bet they don't give a second thought, or even know, how that dividend is created, just that it comes to them, reliably every six months.

There's a few other companies that our income focused NZX investors concentrate on, for the same reasons. Reliable sustained income, regardless of how that is achieved.

Yes for sure, but from 1993 perhaps rolling 3/5 year term deposits have done somewhere in the 4's.

What is reliable sustained income worth when you lose a decade of dividends in share price decline that doesn't come back.

I understand what you are saying but nobody can argue that this is a good business or has produced good returns over time.

Surely to god the answer for these folk is corporate bonds.

[Snoopy]

Well that explains everything. What an absolute disaster no wonder it has underperformed cash for 31 years.

Not true. Spark has not underperformed cash over 31 years

Snoopy you should focus you attention on good businesses and out of NZ, a term deposit has given Spark a good run over multiple decade long periods.

I think you are starting to get where the real measuring stick for Spark shares should be set.

Yes for sure, but from 1993 perhaps rolling 3/5 year term deposits have done somewhere in the 4's.

What is reliable sustained income worth when you lose a decade of dividends in share price decline that doesn't come back.

The share price has been up and down but there has been no massive permanent decline as you suggest. Unless you deliberately pick a peak and a trough to make your (false) point.

I understand what you are saying but nobody can argue that this is a good business or has produced good returns over time.
Surely to god the answer for these folk is corporate bonds.

Not every investor wants all of their portfolio 'operating to the max' to get outstanding growth. Sometimes having part of your portfolio that produces a steady income return is more the ticket. I guess 'corporate bonds' could provide such a solution. But not being a bond investor myself, I think of my Spark shares as a kind of defacto bond.

Of course, Spark have their own bonds. The SPF570 bond last traded on the market at 5.17%.

OTOH the 'Spark shares bond' last traded on an historical gross dividend yield of (27/0.72) / 423 = 8.87%

So SPF570 at 5.17% or SPK at 8.87%? Hmmm, I seem to be having some difficulty in making up my mind here. Which 'bond' should I choose SailorRob?

SNOOPY

[ValueNZ]

=
So SPF570 at 5.17% or SPK at 8.87%? Hmmm, I seem to be having some difficulty in making up my mind here.

That's a false dichotomy. Your options to allocate capital extend far beyond Spark lol.

[Snoopy]

That's a false dichotomy. Your options to allocate capital extend far beyond Spark.

Of course. I am not suggesting people throw all their money into Spark shares or anything like that. All shares have risks and I have previously outlined in this thread what I think they are for Spark going forwards. I am hoping things don't go wrong. But I try to pick my shares so that if things do go wrong, all of my shares will not be equally affected at the same time. IOW the portfolio has some built in robustness to the unexpected. Just before my latest share purchase, Spark shares made up a fraction over 10% of my NZX portfolio, which is made up of twelve different shares. Ideally my target is to have SPK weighted a couple of percentage points more than that, because the portfolio weighting of my two other 'bond' utility type shares, CEN and MCY, are higher than that 10% figure. I judge myself underweight in Spark, so I am adding a few. That is all that is happening here, from my perspective.

SNOOPY