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Fletcher Building shares drop 5.7% as investors seek yield elsewhere

Wednesday 22nd August 2018

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Fletcher Building shares dropped 5.7 percent despite news it expects to resume paying dividends in the 2019 financial year as investors look for more immediate yield.

The company reported a net loss of $190 million for the 12 months to June 30, turning around a profit of $94 million in the prior year. Earlier this year, the construction company suspended its interim dividend and didn't declare a final payment. Today Fletcher said it expects "subject to satisfactory trading performance" to be able to resume dividends in the current financial year.

Alexandra Dalzell, an investment adviser at Craigs Investment Partners, said there is little reason to hold the stock given there is no dividend until 2019 "in a market that needs income" as the central bank has indicated rates will stay low for longer and it could even cut the official cash rate against a backdrop of weaker-than-expected growth. 

"Why would you be there?" she said. "Dividend stocks will be the most rewarded longer term." 

Fletcher's operating losses fell within its own guidance and the company contained expected losses from its B+I division, which have weighed on the company during the past year. 

The stock recently traded at $6.51 and is now down 12 percent so far this year. 



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