The New Zealand sharemarket has a global reputation as a lucrative source of dividends.
But a local fund manager has sounded the alarm over the potential risks this poses to investors.
In its latest market commentary, Auckland's Castle Point used the example of the moves one major international money manager, New York-based BlackRock, has been making in the local market.
After Sky Television entered the 100-member Dow Jones EPAC Select Dividend index in March, a dividend-focused exchange traded fund (ETF) run by BlackRock bought 10.5 million shares in the pay TV operator, according to Castle Point.
The same ETF also has significant investments in Fletcher Building, Spark and SkyCity Entertainment.
And BlackRock hasn't been the only global fund manager chasing the tidy dividends the NZX offers.
"This has been a relentless force in our market in the years since quantitative easing began, to the extent that recently our market has made countless new all-time highs, even while many global sharemarkets have retraced into correction or even bear market territory," Castle Point said.
That's great, but as the fund manager points out, it can all turn to custard in the event of bad news about dividend payouts.
"Firstly, it is never good news when a company reduces its dividend and it will invariably see share price weakness. However, there are all the ingredients present for a near-panic as large blocks of investors have to sell their shares almost immediately. All of these very large holders ... will be forced to sell, due to their mandates, at a time when buyers are likely to be thin on the ground."
End of the dream?
Castle Point also raised the spectre of what the end of the global dividend hunt would mean for the New Zealand sharemarket.
"This could come in a few forms but will most likely relate in some way to rising bond yields," it said.
This would reduce the popularity of dividend-focused equity funds, as better returns could be found elsewhere.
"Outflow from those funds will lead to a reversal of the massive marginal buying of New Zealand shares. KiwiSaver inflows will continue regardless but they can be easily swamped by the scale of global dividend investors."
There would be a cruel irony in that scenario, Castle Point said, as selling by major international investors was likely to depress share prices, in turn resulting in higher dividend yields for stocks.
With the Tegel float done and dusted after the chicken producer's Tuesday listing, the big question is where next for New Zealand's seemingly moribund initial public offering market.
The local IPO pipeline appears to be pretty thin on the ground.
It emerged last week that InMotion Group, whose businesses include ferry operator Fullers, has shelved its listing plans.
Some potential deals still remain on the cards, however.
These include London-listed Arria NLG, which has long-standing links with New Zealand and is understood to be eyeing an NZX listing, possibly in July. Stock Takes has previously reported that a float of the British company, should it go ahead, could raise up to $20 million.
Arria raised the same amount from high-profile Kiwi investors, including economist Gareth Morgan and former Telecom boss Theresa Gattung, before its 2013 listing on London's AIM market.
The company, whose software generates reports usually produced by analysts, has links with Diligent Corporation co-founder Brian Henry.
A market source said another potential deal towards the end of the year was Results.com.
The employee performance measurement company had previously intended to become the first firm to join NZX's new NXT market, launched in June last year with the listing of business mail operator G3 Group.
The Results.com website says an IPO is planned for this year.
There has also been speculation NZX-listed Stride Property will list a retail property fund, while local telco 2degrees is said to be eyeing an IPO that could raise up to $150 million.
Tegel shares closed at $1.67 last night - 7.7 per cent above the $1.55 offer price.