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Spark New Zealand's (NZSE:SPK) Dividend Is Being Reduced To NZ$0.1415

Simply Wall St · 09/05 18:30

Spark New Zealand Limited (NZSE:SPK) is reducing its dividend from last year's comparable payment to NZ$0.1415 on the 3rd of October. The yield is still above the industry average at 9.8%.

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Estimates Indicate Spark New Zealand's Could Struggle to Maintain Dividend Payments In The Future

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Based on the last payment, the company wasn't making enough to cover what it was paying to shareholders. This situation certainly isn't ideal, and could place significant strain on the balance sheet if it continues.

The next 12 months is set to see EPS grow by 16.9%. Assuming the dividend continues along recent trends, we think the payout ratio could reach 187%, which probably can't continue without putting some pressure on the balance sheet.

historic-dividend
NZSE:SPK Historic Dividend September 5th 2025

See our latest analysis for Spark New Zealand

Spark New Zealand Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was NZ$0.18 in 2015, and the most recent fiscal year payment was NZ$0.25. This implies that the company grew its distributions at a yearly rate of about 3.3% over that duration. Slow and steady dividend growth might not sound that exciting, but dividends have been stable for ten years, which we think makes this a fairly attractive offer.

The Dividend Has Limited Growth Potential

The company's investors will be pleased to have been receiving dividend income for some time. However, initial appearances might be deceiving. Earnings per share has been sinking by 10% over the last five years. This steep decline can indicate that the business is going through a tough time, which could constrain its ability to pay a larger dividend each year in the future. However, the next year is actually looking up, with earnings set to rise. We would just wait until it becomes a pattern before getting too excited.

Spark New Zealand's Dividend Doesn't Look Sustainable

Overall, it's not great to see that the dividend has been cut, but this might be explained by the payments being a bit high previously. Dividend payments have been pretty consistent for a while, but we do think the payout ratios are a little bit high. We would be a touch cautious of relying on this stock primarily for the dividend income.

It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. For example, we've identified 2 warning signs for Spark New Zealand (1 can't be ignored!) that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.