Contact Energy's high number of individual "mum and dad" investors can expect to see improved payouts from now on thanks to a change in the power generator and retailer's dividend policy.

The company, in releasing its first half result, said its portfolio of long-life renewable generation assets, supported by a "robust" balance sheet, provided enough confidence for the board to change the distribution policy to a payout ratio of 100 per cent of operating free cash flow, up from 80 to 90 per cent previously.

The change will see the 2019 dividend target increased to 39 cents per share, compared to 32 cents per share declared for 2018.

In line with the new policy, the board approved an interim dividend of 16 cents per share, up its previous interim dividend of 13 cents.

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According to Contact's latest annual report, the company has around 52,000 individual shareholders who have holdings of 5,000 shares or less, representing 10 per cent of its stock.

In its result, Contact said last year's gas shortages and favourable power generating conditions combined to drive its first half earnings sharply higher over the first half to December 31.

The company's EBITDAF - the earnings measure preferred by analysts - shot up by 28 per cent, or $61 million to $278m over the six months to December, driven by strong wholesale electricity prices.

The sale of AGS and the Rockgas LPG businesss boosted the company's net profit to $276 million for the six months from $58 million a year earlier.

When gas supply was affected by outages at the Pohokura field, Contact supported the market by accessing gas and offering additional thermal generation - above contracted sales - to meet wholesale demand.

Craigs Investment Partners analyst Grant Swanepoel said it was a strong result.

"They managed to take advantage of a gas shortage due to Pohokura outages because they had gas available over October and November - so they made good profits during that period," he said.

"They also had fairly consistent inflows into their catchment areas and they had gas available to run their thermal kit when prices were really high, so it was a good performance."

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Swanepoel said the dividend forecast of 39 cents for the year suggested Contact expected a solid second half. The new dividend policy, which was telegraphed to the market last year, means Contact now offered a yield of around 6 per cent.

Chief executive Dennis Barnes said it had been a "testing" operating environment over the half that that included extended unplanned outages at some of New Zealand's largest gas fields, and intense competition.

"Even with volatile wholesale prices, the retail electricity market remains highly competitive, with heavy discounting and large sign on credits the predominant tools for acquiring customers," he said.

Proceeds form the sale of Ahuroa gas storage (AGS) and the sale of the Rockgas LPG business, netted cash proceeds of $438m.

Generation EBITDAF increased by $58 million to $243million in the sixmonths as production from hydro generation increased by 25 per cent, or 410 gigawatt hours, after a dry first half of 2018 in Contact's Clutha catchment.

Contact shares last traded at $6.33, up 11 cents. The stock has risen by 16 per cent over the last 12 months.