Top cash earners on the NZ share market

Which New Zealand shares are the big cash earners?

A $10,000 investment in some of New Zealand's most well-known listed companies could net you more than $800 in the hand over the next year - nearly four times as much as you could get at the bank.

Data crunched by investment advisory firm JBWere has revealed at least five companies listed on the NZX which are forecast to pay a return of more than 8 per cent - even after tax is paid by a top-rate taxpayer.

That compares to around 2 to 3 per cent which people can get on their money at the bank.

Rickey Ward, New Zealand equities manager at JBWere, said New Zealand's listed companies were paying good dividends with the average yield over 4 per cent.

"Property and electricity companies have got yields better than the market average. But the difference between that and the cash rate is still quite material."

While share prices had a dip earlier this year that fall has since been recovered and Ward said dividend payouts were expected to remain strong.

Some companies are also expected to boost their payout ratios or make special dividend payments boosting shareholder returns even further.

Ward said power companies and other utility stocks like Spark were already talking about share buy backs or special dividends which could top up what shareholders are already hoping to get.

Air New Zealand, which has put its stake in Virgin up for sale, could also use the money from the sale to make an extra payment to shareholders, he said.

The reason some of these are trading on such high dividend yields is because the market sees a risk of those yields falling over the next few years... ie Hallenstein Glasson, Air New Zealand... so sometimes its better to look for a more modest yield, that is more sustainable.

But Ward also cautioned investors over selecting companies on yield alone as one reason the yield could be higher was because the capital value or share price might fall due to lower expectations for the company.

Some companies may also be forced to cut their dividends if business doesn't go as well as they expect it to.

Ward said investors were having to pay high prices to buy into some companies purely to get the income.

"It's either adjust your standard of living or go seek income from non-traditional sources. Not many people are able to down-grade their standard of living. They still have to pay the bills.

"A by-product is that share prices have gone up."

Mark Lister, head of research at Craigs Investment Partners, said the highest dividend was not always the best or the safest.

"The reason some of these are trading on such high dividend yields is because the market sees a risk of those yields falling over the next few years... ie Hallenstein Glasson, Air New Zealand... so sometimes its better to look for a more modest yield, that is more sustainable."

Examples of those included Spark, Meridian Energy, Mighty River Power or Vector, he said.

Which stocks could give you the most cash in hand based on a $10k investment?

1) PGG Wrightson $890.62
2) Refining NZ $847.39
3) Methven $844.71
4) Hallenstein Glasson $829.45
5) Steel & Tube $804.95
6) Air New Zealand $768.01
7) Opus Investment Consultants $720.16

- based on forecast dividends, paying tax at 33 per cent and including imputation credits.