Power shares surge to record as investors eye solid income stream

Lake Pukaki. Photo / Richard Robinson

Shares in Mighty River Power and Meridian Energy surged to record highs yesterday after inflation figures stoked expectations that the Reserve Bank will keep a lid on interest rates for longer than previously thought, fuelling the investor appetite for dividend-paying stocks.

Mighty River, whose shares were up 2.5 per cent at a record closing high of $3.42 last night, has been the best performing NZX 50 stock this year, rising 15.9 per cent since January 5.

Meridian is the third-best performer so far in 2015, behind retirement village operator Summerset Group, rising 9.9 per cent since January 5 to close up 2.1 per cent at $1.92 last night, matching the record closing high it hit earlier this month.

Genesis Energy shares rose 2.9 per cent to close at $2.16, while the NZX 50 index finished the day up 0.7 per cent at a record close of 5672.85.

Figures released yesterday showed the annual rate of inflation slowed to 0.8 per cent from 1 per cent in September - below the Reserve Bank's target band of between 1 per cent and 3 per cent.

Craigs Investment Partners head of private wealth research Mark Lister said rising wholesale electricity prices - a result of the dry weather - were also bolstering the power firms' stock prices.

But investors' hunger for dividend yield was the dominant force pushing their valuations higher, Lister said.

"Anything that generates a solid, sustainable income stream just looks better and better."