Contact Energy (ASX:CEN) operated its Dividend Reinvestment Plan (DRP) for its FY26 final dividend. The New Zealand electricity generator and retailer declared a final dividend of NZ 24 cents per share and offered DRP shares at a 2% discount to the market-based price.

Latest developments

Contact reported its FY26 result in August. Revenue was NZ$3,242 million, down 5.7%, while net profit rose to NZ$423 million. Operating Earnings (EBITDAF) increased 31% to NZ$1,011 million, and operating free Cash Flow rose 49% to NZ$648 million. The result included the Manawa Energy business, acquired in 2025, which the company said added 2.4 TWh of renewable output in the year.

The board declared a final dividend of NZ 24 cents per share, taking FY26 dividends declared to NZ 40 cents, after an Interim Dividend of NZ 16 cents paid in the first half of calendar 2026. Shareholders were again given the option of taking the final dividend as new shares through the DRP. Alongside the result, Contact said it was working with CDC Data Centres to explore a potential data centre development at Stratford in Taranaki.

Key numbers

The final dividend is unfranked for Australian tax purposes. Because the dividend is declared in New Zealand dollars, the Australian-dollar amount depends on the exchange rate, and the company's dividend notice specified the Exchange Rate used for Australian payments. The final dividend has been paid.

About the company

Contact Energy is a New Zealand electricity generator and retailer, producing power from geothermal, hydro and thermal stations and selling electricity, gas, broadband and mobile services. Mike Fuge is chief executive. The company is listed on the NZX and quoted on the ASX.

The Manawa Acquisition expanded its renewable generation base and lifted total Assets to approximately NZ$10.7 billion at the end of FY26, and the company is pursuing its Contact31+ growth strategy.

How the DRP works

Contact's DRP applied to the FY26 final dividend, with elections required by the applicable election date after the record date. Under the DRP terms, the price was the volume-weighted average sale price of Contact shares traded on the NZX Main Board over five trading days commencing on the ex-dividend date, less a 2% discount. Contact confirmed the resulting DRP Strike Price in an announcement to the market.

Contact issued new shares under the plan on the dividend payment date, so the DRP adds to the number of shares on issue. Participation is optional, and shareholders who make no election receive cash. According to the company, the DRP is available only to holders with a registered address in New Zealand or Australia.

DRP and tax considerations

The DRP allows participants to acquire additional shares at the discounted DRP price without brokerage or transaction costs. The DRP price is derived from NZX trading during the pricing period, so the value of shares received can differ from the Market Price at the time of issue.

Tax treatment differs from that of an Australian company. The dividend carries New Zealand imputation credits, which Australian residents generally cannot use, and the dividend notice includes a supplementary dividend of about NZ 3.35 cents per share for eligible non-resident holders, a New Zealand mechanism linked to non-resident Withholding tax.

What comes next

Contact held its annual Shareholder meeting in September. Areas of focus include the integration of Manawa, progress on renewable projects under the Contact31+ strategy, and any development from the CDC data centre discussions, which remain exploratory.

Based on its recent payment history, Contact has paid an interim dividend around March and a final dividend around September. Any future dividend amount, imputation level or DRP terms would be determined by the board and disclosed in a dividend notice, along with the exchange rate used for Australian payments.

Risks and context

Past dividends do not indicate future payments. Contact's earnings depend on hydro inflows, wholesale electricity prices, gas availability and regulation in New Zealand, and borrowings increased after the Manawa acquisition. Large renewable generation projects also carry construction cost and timing risks, and growth spending competes with dividends for cash. Currency movements change the Australian-dollar value of NZD dividends, and withholding tax may reduce the cash received.

Because the DRP issues new shares, it adds to the share count. Reinvested dividends are generally still assessable income in Australia, and each DRP parcel establishes a new cost base for Capital Gains Tax purposes. Tax outcomes depend on individual circumstances.

Conclusion

Contact Energy (ASX:CEN) operated its DRP at a 2% discount for its NZ 24 cent final dividend, which is unfranked for Australian purposes. The FY26 result reflected higher earnings and cash flow following the Manawa acquisition, while New Zealand tax, currency and electricity-market factors remain relevant context.

Key Insights

Contact Energy (ASX:CEN) lifted FY26 EBITDAF by 31% to NZ$1,011 million and net profit to NZ$423 million, largely reflecting the contribution of Manawa Energy, and declared total FY26 dividends of NZ 40 cents per share. Its DRP operated for the final dividend using a five-day NZX VWAP less a 2% discount, with new shares issued.

For Australian holders, the dividend is unfranked, NZ Imputation Credits are generally not usable, and the Australian-dollar value depends on the exchange rate set out in the dividend notice. Future dividends and DRP terms remain subject to board decisions.