With a market capitalization of just under $9 billion, Spark is one of the largest companies on the NZX. And when you consider that it has a portfolio of products and services that will arguably remain in high demand irrespective of how the wider economy is performing, Spark could be a good addition to your portfolio if you seek defence shares. But are Spark shares the right investment for you?
In this guide, we show you how to buy Spark shares from the comfort of your home. We also give you some background on the best online brokers to do this with, alongside an overview of the shares’ performance and where they could be headed in the near future.
Step 1: Find an NZ Stock Broker
As Spark shares are publicly listed on the New Zealand Exchange (NZX), you will need to find a reliable online broker that gives you access to this particular marketplace. Not only this, but you also need to look at other important factors – such as how much the broker charges in fees and commissions, and what NZ payment methods it supports.
With this in mind, below we discuss some popular New Zealand share brokers that allow you to buy Spark shares with ease.
Plus500 is an online CFD provider that gives you access to thousands of financial instruments. In particular, the platform offers heaps of New Zealand-listed stock CFDs, including Spark NZ and many of the other best shares to buy or sell. As such, you will be able to speculate on the short-term direction of Spark shares. This includes both long (buy) and short (sell) positions – meaning that you get to decide which way you think the market will go.
Outside of the NZX, Plus500 hosts over 2,000+ other stock CFDs across several marketplaces. This includes stock CFDs listed in the UK, US, South Africa, Germany, France, and more. Irrespective of which share CFDs you decide to trade, Plus500 charges no commissions whatsoever. Instead, it’s only the spread that you need to take into account. At the time of writing, the CFD platform is offering a buy and sell price on Spark NZ CFDs of $4.54 and $4.56 respectively.
This means that you are paying a spread of just $0.02. An additional benefit of trading Spark NZ CFDs is that you will be able to apply leverage. This means that you can trade with more money than you have in your account. In the case of Plus500, New Zealand residents can apply the leverage of up to 1:5.
In terms of the fundamentals, Plus500 allows you to get started with a minimum deposit of £100 – which amounts to about $190 NZD. You will able to open an account in minutes, and then deposit funds with an NZ debit/credit card or bank account. For even more convenience, you can also deposit funds with Paypal. Either way, there are no fees to deposit or withdrawal at Plus500. Finally, the platform’s regulatory standing is as follows:
Plus500AU Pty Ltd (ACN 153301681), licensed by: ASIC in Australia, AFSL 417727, FMA in New Zealand, FSP 486026; Authorised Financial Services Provider in South Africa, FSP 47546.
- Commission-free CFD provider – only pay the spread
- Thousands of financial instruments across heaps of markets
- Ability to trade stock CFDs with leverage of 1:5
- You can buy or sell a companies Share CFDs if you think its value will go up or down
- Takes just minutes to open an account and deposit funds
- Excellent mobile trading app
- CFDs only
CFD Service. Your capital is at risk.
Much like in the case of Plus500, IG allows you to trade stock CFDs. Across a substantial portfolio of 13,000 share instruments, you can enter a buy or sell position on Spark NZ with ease. This includes the ability to apply leverage – which is ideal if you only have access to a small amount of capital.
What is really interesting with IG is that 100% of its client base is currently ‘long’ on Spark NZ. This means that the market sentiment on the firm is extremely strong. What we also like is that the spread is super-tight at IG. In fact, at the time of writing, both the buy and sell price of Spark NZ is $4.56 – meaning that IG allows you to trade at near-on wholesale prices.
In terms of the trading platform itself, IG is going to be the better option if you want access to MetaTrader4. This is because Plus500 only offers its own proprietary platform. IG does, however, also offer its own in-house platform that can be accessed via your standard web browser. IG offers a mobile app too, meaning that you can trade Spark NZ shares on the move.
When it comes to getting started, you can easily open an account with IG. Once you have provided some personal information, you can deposit funds with an NZ debit/credit card or bank account. Minimum deposits are slightly higher at IG, though. This stands at £250 or about $480 NZD. Finally, IG is regulated by several reputable bodies – including ASIC and the FCA.
- Trusted NZ broker with a long-standing reputation
- Good value share dealing services
- Leverage and short-selling also available
- Spread betting and CFD products
- Access to heaps of international stock markets
- Great research department
- Minimum deposit of £250 ($490 NZD)
- US stocks have a $15 minimum commission
Make no mistake about – market sentiment on Spark NZ shares is super-strong at present. However, this doesn’t mean that you should just jump straight in and make a purchase.
On the contrary, you need to ensure that you perform enhanced research on a stock before taking the plunge.
As such, below you will find some useful information that will allow you to make an informed decision as to whether or not an investment into Spark NZ is right for you.
Spark NZ is a domestic telecommunications company that is involved in several sub-divisions. This includes everything from internet services, mobile networks, and fixed-line telephones. In terms of its stocks, Spark NZ was publicly-listed on the New Zealand Stock Exchange in 1991.
The value of Spark shares has been increasing nicely over the past few years. For example, you would have paid in the region $2.82 back in mid-2014. The shares – on a steady upward trajectory at the time, hit peaks of $4.96 in March 2020. This represents a 6-year increase of 75%.
However, the shares took a slight hit not long after, hitting 52-week lows of $3.44. This was likely due to the wider disruptions of the COV-19 lockdown. With that being said, Spark NZ shares are once again moving in the right direction. At the time of writing, they are priced at $4.90 – so we are just a few cents away from new all-time highs.
Spark NZ Dividend Information
On top of a positive outlook on the Spark share price, Spark NZ might also be attractive for those of you that seek dividends. Its most recent distribution came in April, with the firm paying $0.14 per share. Based on its current stock price, this amounts to a rather notable trialing yield of just over 5%.
With that said, there have been rumours that Spark NZ might be forced to revisit its dividend yield in the coming quarters. This is because it is utilizing more cash reserves to meet its dividend payments than it is generating from its operations.
If you’re still sitting on the fence as to whether or not Spark NZ is the right stock investment for you, we are now going to discuss some of the reasons why investors are bullish. As always – you are strongly advised to perform your own research before making an investment, and never buy shares on the back of somebody else’s guidance.
While the true economic fall out of COV-19 is still unknown, many investors in New Zealand will be flocking to so-called ‘staple stocks’. Put simply, these are companies that are active in a sector that remains largely unaffected by a wider economic downfall. Think along the lines of food, household products, beverage, and medicine.
With that said, many would argue that the products supplied by Spark NZ – namely telecommunications, mobile networking, and internet services, are core, staple goods. In other words, they will always be in demand regardless of how the stock markets are performing.
All-Time High Territory
As we briefly covered earlier, it is also notable just how well Spark NZ has performed in 2020 – especially in comparison to the wider markets. For example, the NZX 50 – which is a great way to gauge the health of the New Zealand economy, dropped from highs of 12,073 to lows of 8,498 in the space of 1 month in Q1.
This represents a downfall of nearly 30%. Although the index has recovered much of its losses since, Spark NZ has outperformed the market in this period. In fact, at the time of writing, the telecommunications company is just 6 cents short of its prior all-time high. This once again illustrates that market sentiment on Spark NZ is strong.
While market sentiment is strong on Spark NZ, there are several potential red flags to consider, too. After all, you should always consider both the good and bad points of a stock investment before proceeding.
Dividends Higher Than Earnings
As an investor, receiving dividends is always a good thing. However, this isn’t the case if the respective company is paying out more than it can actually afford. In this sense, some would argue that Spark NZ is overpaying.
For example, its recent dividend payment amounted to 134% of free cash flow levels. In simple terms, this means that it paid more than it generated from earnings. Crucially, this could make its ongoing dividend payment somewhat unsustainable.
Health of Balance Sheet
Leading on from the above section, it is important to have a closer look at the firm’s balance sheet. In particular, we explored the net debt to EBITDA ratio. For those unaware, this looks at a company’s overall relationship with debt.
As per its most recent dividend, this yielded a ratio of 1.83 times. This isn’t over-alarming, which is a good sign. However, if debt continues to rise, Spark NZ will be inching closer towards critical levels.
Underperforming the NZX 50 Index
In the short term, Spark NZ recovered from the COV-19 mass sell-off much quicker than the wider NZX 50 Index. Although this is notable, it is important to look at the bigger picture. Crucially, while the NXZ 50 Index has grown by approximately 96% over the past 5 years, Spark shares have grown by 65% over the same period.
As such, an investment into the firm would have returned significantly less than simply backing a New Zealand index fund. This is somewhat concerning, as you typically want to focus on firms that have the potential to outpace the domestic index, not the other way around.
Step 3: Open an Account and Deposit Funds
So now that we have covered both the good and bad points of buying Spark NZ shares, we are now going to show you what you need to do to make a purchase today. Although there are several online stock trading platforms that host the telecommunications company, we are going to opt for Plus500.
This is because you can choose from both buy and sell positions, spreads are low, and all trades are commission-free. You are, however, free to use any NZ trading platform of your choosing.
To get the ball rolling, visit the Plus500 website and elect to open an account.
You will need to provide the following information:
- First and last name
- Home address
- Date of birth
- New Zealand tax identification number
- Contact details
As a heavily regulated CFD platform, Plus500 will ask you to upload some verification documents. This includes your New Zealand passport/driver’s license and a proof of address. In most cases, Plus500 will verify your documents in less than 10 minutes.
Then, you will be required to deposit some funds. Plus500 has a minimum deposit of £100 (about $190 NZD). You can choose from the following payment methods:
- Debit cards
- Credit cards
- Bank transfer
As soon as you have gone through the registration, verification, and deposit process – you are then ready to trade Spark NZ share CFDs. As Plus500 is home to thousands of financial instruments, you are best advised to search for the company, and then click on the corresponding result.
You will then see an order box pop-up on the right-hand side of the screen.
Here you need to specify the following:
- Whether you want to place a buy (long) or sell (short) position
- How much you wish to stake
- If you want to apply leverage, and at what level
- Your stop-loss and take-profit prices (not compulsory, but recommended)
Then, you simply need to confirm your order.
Although there are slight concerns about the firm’s inability to meet its recent dividend payment through earnings alone, the overall consensus on Spark shares is positive. Both of the brokers that we discussed in this guide – IG and Plus500 are currently reporting a 100% ‘buy’ sentiment on the stock. This means that nobody is looking to short Spark NZ at present – which is a great sign.
If you do want to trade Spark NZ via CFD instruments, you can do this with Plus500 on a commission-free basis. In fact, it takes just minutes to get set up with an account, and NZ debit/credit card deposits are instant.
Simply click the link below to begin trading Spark NZ shares now!
CFD Service. Your capital is at risk.
What is the Spark share price?
At the time of writing in August 2020, Spark NZ shares are priced just above $4.90. This means that it is just $0.06 short of its prior all-time highs.
What stock exchange is Spark NZ listed on?
Spark NZ is listed on the New Zealand Exchange (NZX).
Does Spark NZ pay dividends?
Yes, Spark NZ does pay dividends. Its most recent payment amount to a trialing yield of just over 5%.
Is Spark NZ part of the NZX 50 Index?
Yes, with a market capitalization of just under $9 billion, Spark NZ is one of the largest constituents of the NZX 50 Index.
Where can I buy Spark shares?
If you want to buy Spark shares, you will need to use an online broker that gives you access to the NZX. Alternatively, you might also consider a commission-free CFD platform that allows you to trade Spark NZ shares.