Best time to buy over last ten years?
Spark has a long history dating back to the Telecom New Zealand days. But the demerger of the landline and fixed fibre business Chorus, saw a 'new Telecom', which by the time AR2014 came out was renamed Spark. Spark came out fighting as a retailer into the new competitive market place, with Vodafone (now One New Zealand) and 2 degrees as significant other players. That means FY2014 is a reasonable 'base reference year' from which to assess the 'new Spark', shed of the old Telecom baggage.
I have been a Spark shareholder all of that time. Each year I note down the share price on 30th September. That is typically about six weeks after the annual result is released to the market. That is enough time for analysts to digest the results and get recommendations out to their clients. Thus by that date, Mr Market has had a good chance to assess fair value of Spark shares.
Spark has never been a 'get rich quick' share. But it has always been a reliable dividend payer, and I use the metric of 'historic gross dividend yield' as my measuring stick. So I ask the question, "When has been the best time to buy Spark?" in that context. What does the data say?
Year |
Dividends as Declared |
Gross Dividends |
Gross Dividend Total |
Share Price 30-09-20xx |
Gross Dividend Yield |
FY2014 |
8.0c+8.0c |
11.11c + 11.11c |
22.22c |
$2.97 |
7.48% |
FY2015 |
9.0c+9.0c |
12.50c + 12.50c |
25.00c |
$2.98 |
7.48% |
FY2016 |
11.0c+12.5c |
15.28c + 17.25c |
32.53c |
$3.61 |
9.01% |
FY2017 |
12.5c+12.5c |
17.36c + 17.25c |
34.61c |
$3.65 |
9.48% |
FY2018 |
12.5c + 12.5c |
17.22c + 16.15c |
33.37c |
$4.05 |
8.24% |
FY2019 |
12.5c + 12.5c |
16.15c +16.15c |
32.30c |
$4.41 |
7.32% |
FY2020 |
12.5c + 12.5c |
16.15c + 16.15c |
32.30c |
$4.70 |
6.87% |
FY2021 |
12.5c + 12.5c |
17.36c + 17.36c |
34.72c |
$4.78 |
7.26% |
FY2022 |
12.5c + 12.5c |
17.36c + 17.36c |
34.72c |
$5.00 |
6.94% |
FY2023 |
12.5c + 13.5c |
17.36c + 18.75c |
36.11c |
$4.81 |
7.51% |
FY2024 |
13.5c + 13.5c |
18.75c + 18.75c |
37.50c |
$4.06 (2) |
9.24% |
Notes
1/ Some samples of how the gross dividend calculations were made in the above table follow:
Gross Dividend Calculations
FY2017 P2:12
11.0c (Ordinary, 100% imputed) + 1.5c (Special, 80.6% imputed):
= 11.0c (FI) + 1.209c (FI) + 0.291c (NI) = 11.0c/0.72 + 1.209c/0.72 +0.291c = 17.25c (gross dividend)
FY2018 P1:
11.0c (Ordinary, 100% imputed) + 1.5c (Special, 75% imputed):
= 11.0c (FI) + 1.125c (FI) + 0.375c (NI) = 11.0c/0.72 + 1.125c/0.72 + 0.375c = 17.22c (gross dividend)
FY2018 P2, FY2019 P1, FY2019 P2, and FY2020 P1 (All 75% imputed): 11.0c (ordinary) + 1.5c (ordinary) = 12.5c (total)
12.5c (Ordinary, 75% imputed) = 9.375c (FI) + 3.125c (NI) = 9.375c/0.72 +3.125c = 13.021c +3.125c = 16.15c (gross dividend)
FY2020 P2:
12.5c (Ordinary, 75% imputed) = 9.375c (FI) + 3.125c (NI) = 9.375c/0.72 +3.125c = 13.021c +3.125c = 16.15c (gross dividend)
FY2021 P1, FY2021 P2, FY2022 P1:
12.5c (Ordinary, 100% imputed) = 12.5c (FI) = 12.5c/0.72 = 17.36c = 17.36c (gross dividend)
2/ 30th September 2024 is still in the future as I write this post. Therefore I have used my 11th June trading price of $4.06
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The answer was 2017. But 2024 'right now' is not far away. I think 'right now' is an amazing portfolio building opportunity, the sort of opportunity that only comes along once in every ten years or so. If you are an income investor and don't have Spark in your portfolio now is the time to invest. I have been underweight a bit for a while myself and have been waiting for an opportunity such as this to 'load up'.
So today I pushed the buy button, buying the third tranche of my catch up purchase at $4.06. This goes with the other parcel I bought last month at $4.36 and the third parcel a month before that at $4.68. The parcels were not equal in size. So the average price I have ended up paying was $4.33 per share. I am not too worried about not buying at the absolute bottom though. IMO SPK is currently a massive bargain with a significantly better yield than anything else in the NZX50. It doesn't pay to sweat the cents, and my splitting of my order into three parcels in three consecutive months was part of the 'dollar cost averaging' buy point game that I was playing.
I just feel so lucky to be alive at such a time an incredible bargain such as this is available and to have the cash available to take advantage of it. Actually having the cash available wasn't lucky. That bit was planned
SNOOPY