Contact's Data Center Ambition Could Weigh on Dividend

Dow Jones
08/11

0041 GMT - Jarden pares its medium-term dividend outlook for Contact Energy as it adjusts to it possibly becoming involved in data centers. Contact has agreed with CDC Data Centres to assess a potential data center at Stratford, New Zealand. The companies plan to seek resource consent for a 250-megawatt data center near the site of Contact's closed Taranaki Combined Cycle gas power plant. Jarden notes Contact's FY 2027 dividend guidance of NZ$0.42/share represents a 101% payout on a trailing cash flow basis. "To account for potential equity co-investment in large-scale digital infrastructure, we have prudently reduced our dividend payout assumption from FY28 onwards to 80% of four-year trailing per-share cash flow, at the bottom end of Contact's 80-100% target range," analyst Grant Swanepoel says.

 

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