SPK- Spark NZ (TELCO)

[Felonius]

Thank you for your thoughts Harrie.
What you are proposing sounds rather like the portfolio of The Milford Balanced Fund which has served us very well over a number of years.

[BIRMANBOY]

The beauty of SPK is not in the growth its in the dividend. Since they reccomended it as a dividend producer its a little unreasonable to expect growth from a fully grown monster. At its peak presumably it was still delivering a good yield but its so important to top up periodically when you get dips. Obviously impossible to know whats in the future SP wise but by looking back over the years you can pick price points to buy at when they happen. So for example looking at the 3year chart , if you bought at or around 4.30 you would have had several opportunities to add. Also looking at the 5 year chart what was high then is now a good price. Time in the market and buying in the dips will even out the occasional "bad buy" and you end up with not only a srtong dividend % but also a capital increase. I started buying in 2010 at 2.40 and have added at least a dozen times so now my gross dividend yield % is over 15% (on original capital) (plus considerable capital increase). So given the right discipline and some patience it has been a very reliable performer. Its hard to get good growth and strong dividends both so knowing what is best for your investment goals is crucial. I would hazard a guess that in 5 years you will have a better opinion of SPK if you have the patience

Funny you should mention Craigs. At one stage I was a client and they recommended SPK for dividends back when it was at the peak. Trustingly I invested. It's been a couple of years so after today's drop I am $250 away from break even. It's definitely not a winning investment for me... I don't see anything that SPK have on their future plans that will in any way accelerate their growth.

[tango]

The beauty of SPK is not in the growth its in the dividend. Since they reccomended it as a dividend producer its a little unreasonable to expect growth from a fully grown monster. At its peak presumably it was still delivering a good yield but its so important to top up periodically when you get dips. Obviously impossible to know whats in the future SP wise but by looking back over the years you can pick price points to buy at when they happen. So for example looking at the 3year chart , if you bought at or around 4.30 you would have had several opportunities to add. Also looking at the 5 year chart what was high then is now a good price. Time in the market and buying in the dips will even out the occasional "bad buy" and you end up with not only a srtong dividend % but also a capital increase. I started buying in 2010 at 2.40 and have added at least a dozen times so now my gross dividend yield % is over 15% (on original capital) (plus considerable capital increase). So given the right discipline and some patience it has been a very reliable performer. Its hard to get good growth and strong dividends both so knowing what is best for your investment goals is crucial. I would hazard a guess that in 5 years you will have a better opinion of SPK if you have the patience

Thanks for your advice. I think if I was buying right now I would be very pleased with SPK. The dividend yield is fantastic. My average buy price is $4.60 because I added when the price dropped to $4.45

At some stage I will probably buy more but the way the market is going there could be better buys in the next few months

[Nor]

If interest rates go up share price has to come down. That's been true for years now so why start to buy just when rates are finally starting to move? I've avoided the dividend payers for years now, just keeping what I bought at low averages.
It would be good to know a formula which could predict the theoretical final value of the dividend payers in this tightening cycle. Then one could buy if normal volatility achieved the price, without having to wait.

[Snoopy]

If interest rates go up share price has to come down. That's been true for years now so why start to buy just when rates are finally starting to move? I've avoided the dividend payers for years now, just keeping what I bought at low averages.
It would be good to know a formula which could predict the theoretical final value of the dividend payers in this tightening cycle. Then one could buy if normal volatility achieved the price, without having to wait.

The only thing certain in these investment markets is that 'this time' is not going to play out in exactly the same way as 'last time' or the time before that. The fact is interest rates could go either way. My feeling is that at some stage we are in for a delayed 'Covid-19 shock', Adrian will panic and interest rates will stall if not fall. I think we are months rather than years away from this. So I am looking to dollar cost average in the next few months into some good dividend payers (including Spark). I am happy with the yields available now, so I have no need to pick bottoms. If others can get a better deal than me then good on them.

SNOOPY

discl; topped up just before the dividend at a good yield, but am now down on that particular purchase (but with no need to crystallize that loss)

[Harrie]

Apart from your partner and children what asset do most people value the most?. Many years ago that probably would be your house, but IMO things have changed radically and now its...your smart phone.

Your smartphone is your connection to your career, your family and friends, social media, google, finding places, storing data, using data, txts emails, news podcasts, a payment mechanism and much more. Its actually your closest remote connection to everything. Think about the panic you go into if its stolen or even left behind somewhere!

So now consider what happens when you don't pay your bill to SPK (or another ISP) Thats right you have just lost your ability to stay connected. Enter SPK. Lots of beautiful renewable income streams because everyone wants to stay connected. Most will pay their ISP (internet service provider) before they pay the power bill.

Now think about what 5G will do and the development of the internet of things(IoT), revenue increases when travel starts up again, added services and connections, growing populations etc on top of those wonderful income streams and the potential for growth is just the bonus. Sure there is competition, but I am more than happy to use SPK as my main defensive stock because even another round of covid is not going to lead to customers dropping access to one of their most essential assets.

Dividends are also mainly paid out of free cash flow. Nice

[BlackPeter]

Apart from your partner and children what asset do most people value the most?. Many years ago that probably would be your house, but IMO things have changed radically and now its...your smart phone.

Your smartphone is your connection to your career, your family and friends, social media, google, finding places, storing data, using data, txts emails, news podcasts, a payment mechanism and much more. Its actually your closest remote connection to everything. Think about the panic you go into if its stolen or even left behind somewhere!

So now consider what happens when you don't pay your bill to SPK (or another ISP) Thats right you have just lost your ability to stay connected. Enter SPK. Lots of beautiful renewable income streams because everyone wants to stay connected. Most will pay their ISP (internet service provider) before they pay the power bill.

Now think about what 5G will do and the development of the internet of things(IoT), revenue increases when travel starts up again, added services and connections, growing populations etc on top of those wonderful income streams and the potential for growth is just the bonus. Sure there is competition, but I am more than happy to use SPK as my main defensive stock because even another round of covid is not going to lead to customers dropping access to one of their most essential assets.

Dividends are also mainly paid out of free cash flow. Nice

You are right - smartphones are important to people and Spark is one of the service providers. This is the plus side.

On the other hand however ... there are strong competitors for the service provider position and they are growing in size. Main competition is over price (which is nice for the user, but not desirable for the service provider). And hey - The monthly bill for my cell phone contract these days is lower than the monthly rental for my land line 30 years ago (not even considering inflation) ... despite me getting much more out of the cell phone.

While I agree that the Telecom industry will keep growing, am I not sure that being a player in this industry is for the shareholders a one way ticket to wealth.

Some players will do better than others but all will need to work really hard to stay on top of the ongoing changes.

I guess time will tell where Spark will end up in this race - but they didn't really made a lot out of their once incumbent position over the last two decades, didn't they?

[tango]

I was hoping SPK would expand more into offering cloud services and security services eg protection against DDOS attacks to NZX and Waikato DHB. There’s good money to be made in that field and it’s a less price sensitive service

Once upon a time I had a mobile and a landline.
Once upon a time I paid for toll calls.
Now with mobile technology changes and apps that allow phone calls I have only a mobile phone and I can’t remember the last time I paid for a toll call.

Surely Spark has lost toll revenue and landline revenue and will continue to do so. More companies are using VOIP instead of making toll calls through a toll provider

[mondograss]

I was hoping SPK would expand more into offering cloud services and security services eg protection against DDOS attacks to NZX and Waikato DHB. There’s good money to be made in that field and it’s a less price sensitive service

Once upon a time I had a mobile and a landline.
Once upon a time I paid for toll calls.
Now with mobile technology changes and apps that allow phone calls I have only a mobile phone and I can’t remember the last time I paid for a toll call.

Surely Spark has lost toll revenue and landline revenue and will continue to do so. More companies are using VOIP instead of making toll calls through a toll provider

Spark own Revera where Waikato DHB host their servers and their performance left a lot to be desired. I expect they will likely suffer hugely when both Azure and AWS open their data centres here.

[Nor]

The most sensible thing to do but also the hardest would be to save one's investable until one of the periodic mini crashes and then have the fortitude to buy. I'm not talking about 1929 style events. Wouldn't need to wait more than 2 years. Guaranteed.