Sharemarket heads back up after slide

Mighty River Power shares were up about 3 per cent to $3.46. Photo / NZME.

Mighty River Power leads the way as investors regain appetite for firms with dependable dividend yields.

New Zealand shares rose yesterday, heading back towards a record high after a two-day slide, as investors regained their appetite for companies offering relatively attractive, dependable dividend yields, such as Mighty River Power and Spark New Zealand. Kathmandu tumbled after announcing a first-half loss.

The NZX 50 Index rose 12.70 points, or 0.2 per cent, to 5756.69. Within the index, 25 stocks rose, 14 fell and 11 were unchanged. Turnover was $106 million.

Mighty River Power rose about 3 per cent to $3.46, leading the index higher. The stock trades at a forward dividend yield of 4.8 per cent, while an average two-year term deposit offers about 4.68 per cent, according to interest.co.nz.

Meridian Energy rose 1.3 per cent to $1.94 and Spark gained 1.2 per cent to $3.34. Goodman Property Trust led gains among some property investors, also held for the dividend yield, rising 1.3 per cent to $1.195.

The trust's manager last week said Singapore's GIC gained approval to invest in its Viaduct Quarter project in downtown Auckland.

"Some of the yielding stocks are getting a little bit of interest after they had a retracement last week," said Shane Solly, a portfolio manager at Harbour Asset Management.

Xero rose 2.3 per cent to $16 after saying customer sales were tracking 79 per cent ahead of the previous year in the first nine months of its financial year, in line with its revenue growth forecasts. Xero had $147.8 million of cash to fund its growth at the end of the third quarter, down from $170.8 million at the end of the second quarter, meaning it burned through $23 million chasing sales in lieu of profits.

"People have highlighted it gives them a window of a year or so before they use that cash up and they might need to raise some more equity to support their growth before then," Solly said.

Kathmandu, the outdoor equipment retailer, tumbled 27 per cent to $1.47 after saying Christmas and January trading lagged behind expectations, resulting in a loss of $1 million to $2 million for the 26 weeks ended January 25, from a profit of $11.4 million in the same period a year earlier.

"The market reacted pretty violently to a seasonal miss in sales," Solly said. "The stock tends to depend on its winter sales so they'll be praying for a bit of cold weather."

Z Energy rose 1.2 per cent to $5.01 and Infratil gained 1.1 per cent to $3.195. Air New Zealand rose 0.8 per cent to $2.63 and Fletcher Building gained 0.8 per cent to $8.45.

Ryman Healthcare rose 0.7 per cent to $8.31 and Metlifecare rose 0.2 per cent to $4.81.

Abano Healthcare, the specialist medical investment firm, fell 2.4 per cent to $8.30 after it announced it had quit its bid for pathology work across the lower North Island, saying the terms of the contract on offer were not workable, and was reviewing the cost the loss of that work would have on its business.

Synlait Milk dropped 2.1 per cent to $3.33 after the listed dairy processor cut its forecast market milk payout for the 2014/15 season to $4.40 a kilogram of milk solids from a previous forecast of $5/kg, citing weak world prices. A2 Milk fell 1.9 per cent to 53c.