TWR - Tower Insurance

[HAWKDOG]

I also asked about natural disasters - as TWR is an insurance company:

yes, as an insurance company operating primarily in New Zealand (and some Pacific markets), Tower Limited (TWR.NZ) faces inherent exposure to natural disasters, particularly earthquakes, cyclones/storms, floods, landslides, and increasingly sea surge due to climate factors. New Zealand has one of the highest natural disaster risk profiles globally, which is a key ongoing concern for the entire local insurance sector.That said, Tower appears well-positioned to manage these risks without major threats to its dividend sustainability in the near term, based on recent developments (as of late 2025/early 2026).Key Strengths in Risk ManagementTower has invested heavily in risk-based pricing (introduced for earthquakes in 2018, floods in 2021, and expanded to landslide and sea surge in 2025). This uses detailed, address-level data to better match premiums to actual risks, reducing exposure to high-hazard properties:Over 90% of new residential policies now have low or very low flood exposure.
For existing customers, the 2025 expansions mean ~90% see reductions in the natural hazards portion of premiums (average ~$70 savings), while higher-risk properties face phased increases.

This approach helps avoid cross-subsidisation, improves portfolio quality, and supports profitability even in a high-risk environment.Tower also maintains a robust reinsurance program to protect against large-scale catastrophe events:For the financial year to September 2026, catastrophe cover has been increased to NZ$915 million for the first two events (up from $800 million previously), with additional cover up to $85 million for a third event.
Retention/excess per event is NZ$20 million (a slight increase but still manageable).
Reinsurance costs are expected to be lower as a percentage of gross written premiums (~10.7-11% vs. higher in prior years), thanks to favorable market conditions, structural changes (e.g., shifting to excess-of-loss for large individual risks), and Tower's improved risk profile.

In FY25 (ended September 2025), Tower benefited from relatively benign weather, with only $7 million in large event claims (from minor events like Dunedin flooding and Cyclone Tam). Recent storms in late 2025 are estimated at $4.5 million (to hit FY26), well within their $45 million large events reserve allowance.This contributed to a record underlying profit of $107.2 million in FY25, allowing a strong dividend increase (total 24.5 cents per share for FY25, fully imputed). Guidance for FY26 assumes normalization of weather but remains positive ($55-65 million underlying NPAT).Potential ConcernsA major catastrophe (e.g., a significant earthquake like past Canterbury events or a severe cyclone) could still generate substantial claims. Historical events like Cyclone Gabrielle (2023) led to higher costs and reinsurance recoveries, but Tower's program is designed to cap net exposure.
Ongoing legacy issues from Canterbury earthquakes (e.g., a small number of open/reopened claims) contributed to non-underlying charges in FY25, though these are diminishing (only 13 properties open as of late 2025).
Broader sector risks include rising reinsurance costs globally from increased disaster frequency, potential premium affordability issues in high-risk areas, and calls for government climate adaptation funding to avoid an "insurance crisis" (as Tower's CEO highlighted in early 2025).
Dividends could face pressure if multiple large events occur in quick succession (beyond the three-event cover), but the current setup (including a conservative reserve) provides a good buffer.

Overall Assessment for Dividend SustainabilityTower's focus on risk mitigation, strong reinsurance, and recent profitability (with high ROE and low combined operating ratio) make it resilient compared to peers. The high dividend yield (~11-12% trailing in recent data) remains supported, with the Board distributing benefits from benign periods while maintaining prudence. Natural disasters are a core risk for any NZ insurer, but Tower's proactive strategies (risk-based pricing + solid cat cover) mitigate this better than in the past, and no major red flags appear for 2026 based on current info.If a big event hits, monitor updates closely — but on balance, it's not a deal-breaker for TWR as a dividend play. Let me know if you'd like a deeper dive into their latest annual report or comparisons with other NZ insurers!

[Basil]

Wow, A.I is getting better and better. That's a superb summary of the situation.  Could you please post the top 20 dividend stocks A.I selected in order of preference. Thanks in advance.

[Dolcile]

I just tried this with Grok and it gave me Spark as #1 so I binned it lol

I'm trying copilot research agent now. 

[Basil]

I just tried this with Grok and it gave me Spark as #1 so I binned it lol

I'm trying copilot research agent now. 

I tried the same with Gemini.  It doesn't appear to be picking up the value of imputation credits or the tax advantages of the PIE structure of the REITS.

[HAWKDOG]

Wow, A.I is getting better and better. That's a superb summary of the situation.  Could you please post the top 20 dividend stocks A.I selected in order of preference. Thanks in advance.

Good morning! Based on current market data from early 2026, I've analyzed dividend-paying stocks listed on the NZX. I focused on those with positive yields, drawing from comprehensive lists and financial metrics across sources. The ranking prioritizes dividend sustainability (e.g., lower payout ratios under 80-100%, positive free cash flow, reasonable debt levels, strong return on equity above 10%, and solid profit margins) alongside growth potential (e.g., lower P/E ratios indicating value relative to earnings, positive indicators like ROE and profit margins suggesting future expansion capability). High yields are factored in but deprioritized if sustainability is weak (e.g., excessively high payouts or negative cash flows).

Note: Not all NZX stocks pay dividends (only about 60-80 do consistently), and data is subject to market changes. I prioritized major ones with available metrics; smaller or less liquid stocks may exist but weren't included if data was incomplete. Metrics like 5-year dividend growth and expected EPS growth were often unavailable or inconsistent across sources.

Here's the top 20 ranked from best to worst:

| Rank | Company Name | Ticker | Dividend Yield (Trailing) | Payout Ratio | Return on Equity | Debt to Equity | Free Cash Flow (TTM) | Key Notes |
|------|--------------|--------|---------------------------|--------------|------------------|----------------|----------------------|-----------|
| 1 | Tower Limited | TWR.NZ | 11.78% | 66.18% | 23.54% | 7.28% | 108.64M | Strong sustainability with moderate payout, very high ROE, minimal debt, positive FCF; low P/E (9.09 trailing, 9.76 forward) suggests good growth value.<grok:render card_id="935f75" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">54</argument>
</grok:render> |
| 2 | Livestock Improvement Corporation Limited | LIC.NZ | 12.20% | 26.55% | 10.69% | 7.81% | 22.72M | Highest yield with excellent sustainability (very low payout/debt, positive FCF); low P/E (4.55 trailing) indicates undervalued growth potential.<grok:render card_id="795da3" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">55</argument>
</grok:render> |
| 3 | Argosy Property Limited | ARG.NZ | 5.36% | 36.84% | 11.92% | 62.69% | 85.09M | Low payout, strong ROE and exceptionally high profit margin (97.51%); positive FCF and low P/E (6.93 trailing) support growth in real estate sector.<grok:render card_id="c4f18d" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">41</argument>
</grok:render> |
| 4 | Skellerup Holdings Limited | SKL.NZ | 4.84% (5.44% forward) | 88.38% | 23.23% | 24.47% | 47.55M | Slightly higher payout but outstanding ROE, low debt, strong profit (15.43%), positive FCF; P/E (19.05 trailing) reasonable for industrial growth.<grok:render card_id="84330c" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">40</argument>
</grok:render> |
| 5 | South Port New Zealand Limited | SPN.NZ | 3.47% | 53.36% | 21.00% | 47.03% | 11.01M | Balanced payout, high ROE and profit (21.04%), positive FCF; P/E (16.21 trailing) suggests steady transportation sector potential.<grok:render card_id="f0b2a2" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">52</argument>
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| 6 | Delegat Group Limited | DGL.NZ | 4.24% | 41.25% | 8.59% | 75.77% | 43.5M | Low payout, solid profit (14.03%), positive FCF; low P/E (9.67 trailing) points to value in consumer goods/wine industry growth.<grok:render card_id="dcb03b" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">47</argument>
</grok:render> |
| 7 | Property For Industry Limited | PFI.NZ | 3.50% | 39.34% | 7.62% | 49.88% | 39.12M | Low payout, very high profit (83.18%), positive FCF; P/E (11.56 trailing) good for real estate expansion.<grok:render card_id="b791c9" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">51</argument>
</grok:render> |
| 8 | Fonterra Co-operative Group Limited | FCG.NZ | 9.50% | 78.33% | 12.16% | 37.99% | -1.18B | High yield with decent ROE and low debt, but negative FCF raises sustainability concerns; low P/E (10.02 trailing) for dairy sector potential.<grok:render card_id="1e90fb" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">35</argument>
</grok:render> |
| 9 | Contact Energy Limited | CEN.NZ | 4.19% | 93.75% | 12.31% | 88.73% | 128M | Borderline high payout but good ROE/profit (9.62%), positive FCF; P/E (22.33 trailing, 22.73 forward) moderate for energy growth.<grok:render card_id="aa4280" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">48</argument>
</grok:render> |
| 10 | EBOS Group Limited | EBO.NZ | 6.85% | 100.96% | 8.39% | 59.61% | 285M | High yield but elevated payout; positive FCF, ok ROE; higher P/E (23.46 trailing, 21.64 forward) for healthcare distribution growth.<grok:render card_id="e829b1" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">45</argument>
</grok:render> |
| 11 | Genesis Energy Limited | GNE.NZ | 5.84% | 91.16% | 5.98% | 50.06% | 3.92M | Decent yield but high payout and low ROE; positive FCF; P/E (15.74 trailing, 30.77 forward) suggests limited near-term growth.<grok:render card_id="5076f0" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">38</argument>
</grok:render> |
| 12 | Air New Zealand Limited | AIR.NZ | 4.24% | 74.32% | 6.37% | 145.84% | 403.62M | Moderate payout and positive FCF, but high debt and low profit (1.87%); high forward P/E (28.49) limits growth outlook.<grok:render card_id="a522ba" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">56</argument>
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| 13 | Goodman Property Trust | GMT.NZ | 3.38% | 90.24% | 4.05% | 27.01% | 132.21M | High payout and low ROE offset by low debt, high profit (43.90%), positive FCF; P/E (28.37 trailing) for real estate.<grok:render card_id="2f1c39" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">53</argument>
</grok:render> |
| 14 | Spark New Zealand Limited | SPK.NZ | 10.87% | 194.28% | 16.21% | 159.28% | -33.25M | Very high yield but unsustainable payout/debt, negative FCF; P/E (16.94 trailing, 17.89 forward) ok but risks high.<grok:render card_id="70f7ac" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">34</argument>
</grok:render> |
| 15 | Vector Limited | VCT.NZ | 5.13% | 162.86% | 4.19% | 58.34% | -65.33M | High payout, low ROE, negative FCF; moderate debt but limited growth (P/E 31.92 trailing).<grok:render card_id="b30631" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">43</argument>
</grok:render> |
| 16 | Kiwi Property Group Limited | KPG.NZ | 5.21% | 378.47% | 1.27% | 70.66% | -147.47M | Unsustainable high payout, low ROE, negative FCF; high P/E (73.26 trailing).<grok:render card_id="488530" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">42</argument>
</grok:render> |
| 17 | Precinct Properties NZ Ltd & Precinct Properties Investments Ltd | PCT.NZ | 5.62% | 978.26% | 0.55% | 85.40% | -161.55M | Very high payout, low ROE, negative FCF; extremely high P/E (175.36 trailing).<grok:render card_id="ff8dc4" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">39</argument>
</grok:render> |
| 18 | Chorus Limited | CNU.NZ | 6.14% | 6,959.46% | 0.57% | 703.17% | 138.4M | Extremely high payout/debt, low ROE/profit; very high P/E (1.28k trailing).<grok:render card_id="e86470" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">37</argument>
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| 19 | Mercury NZ Limited | MCY.NZ | 3.66% | 33,714.29% | 0.02% | 47.83% | -3.99M | Unsustainable payout, near-zero ROE/profit, negative FCF; extremely high P/E (9.40k trailing).<grok:render card_id="11f83c" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">57</argument>
</grok:render> |
| 20 | Vital Healthcare Property Trust | VHP.NZ | 4.91% | 55.73% | -2.94% | 82.61% | 14.15M | Low payout but negative ROE/profit (-28.92%), moderate debt; P/E (12.90 trailing) but poor growth signals.<grok:render card_id="826689" card_type="citation_card" type="render_inline_citation">
<argument name="citation_id">44</argument>
</grok:render> |

This ranking favors stocks with resilient dividends (less likely to cut) and upside from strong fundamentals. For example, top picks like TWR and LIC combine high yields with robust balance sheets, while lower ranks have red flags like overextended payouts. If you need details on specific stocks or adjustments (e.g., sector focus), let me know!

[HAWKDOG]

I just tried this with Grok and it gave me Spark as #1 so I binned it lol

I'm trying copilot research agent now. 

What exactly did you ask for?

I asked Grok to analyse nzx dividend stocks and rank the top 20 based on dividend sustainability and growth potential

[Dolcile]

Hand-break coming off - not much on the sell side

[alkebab]

Hand-break coming off - not much on the sell side

It's as if all of the funds all decided to........not sell for once. lol.

Bought some more yesterday.

Even at $2.39 you're still getting 6.3% after tax with tomorrow's dividend (pointing at the 100000 sell at 2.39).

[777]

ex dividend tomorrow.

[Left Field]

ex dividend tomorrow.

And encouraging trading today ex dividend.

[Basil]

Ronaldson on the other channel looks pretty safe with his hopes for $2.00 by the end of the month I reckon   

[Basil]

BINGO for Ronaldson and other holders.  $2 ex divvy, (last trade $2.01) came more than 2 weeks early and we haven't even got into the DRIP program some holders will be running on their own account to reinvest their dividend payment into more shares. 

[Left Field]

BINGO for Ronaldson and other holders.  $2 ex divvy, (last trade $2.01) came more than 2 weeks early and we haven't even got into the DRIP program some holders will be running on their own account to reinvest their dividend payment into more shares. 

Crikey, Invest Direct quoting a dividend of $0.34 cps or 17.06% at today's SP, that should help keep the SP above $2.00!

[Basil]

PE of 8.5 showing on their website for a growth company looks bloody amazing too, but I agree, 17% yield is incredible.  Long may it continue. but even acknowledging last year was a stellar one for claims and even assuming they use up their 10 year average of $15m of their $45m extreme event provision this year, the current year yield is still going to be fabulous.   I reckon ~ 21 cps in dividends is on the cards this year which is nearly 15% gross.

[Arbroath]

Could easily yield about 14% gross this year at $2.00 but that assumes only $15m of one off events.

The thing about one off events is they don't usually come in around the average. More likely only $5-10m or $50m etc so better to think in terms of receiving about 80% of the $60m underlying profit. That's still a 10% gross yield.