MEL - Meridian Energy

[Beagle]

Thanks Beagle. Craigs rate Meridian and Contact as their top stocks in this area. About GNE, would the price drop after 2 April since it has paid the divvy? As bond proxies would it be true to say that electricity stocks have more growth therefore a better buy than the property stocks?

Thanks for where Craigs see it, (2 out of 3 for me isn't bad). Yes price will probably drop by the dividend amount on the day it goes ex but in most cases the dividend paid is recovered fairly promptly in the share price after that, usually with a few weeks if not earlier. I have looked into this and believe if one is buying one is always best to buy cum dividend a few weeks before a stock goes ex divvy and if one is selling sell on an ex dividend basis a few weeks after a dividend, all other factors being equal. MEL and CEN had very strong runs these last few weeks. GNE, less so and could be due for some relative outperformance relative to its peers.

Property stocks v Gentailers as a bond proxy. I think the converse is probably true. If one normalises the unusual demand this summer caused by the prolonged dry hot spell, (extra demand by air conditioning systems and irrigations systems) national electricity demand is generally flat and only moving in line with population growth. On the other hand many of the leases that the property companies have, have annual or bi annual ratchet clauses such that rent goes up by x % per annum or the market rate, whichever is the greater. x is often 2-3% per annum compounding. ARG is PIE, (portfolio investment entity), net yield at $1.24 is just on 5%, (gross effective yield for those on a 33% tax rate) is 7.5% per annum. I bought some more ARG last Friday, nice safe boring dependable yield. Boring is good