New Zealand’s largest mobile phone provider (by revenue) Spark New Zealand Ltd (ASX: SPK) today announced its full year results. Here is a quick summary of the company’s key measuers:

Spark New Zealand Ltd FY15 FY16 % Change
Revenue 3,531 3,497 -1%
Profit 375 370 -1.3%
Earnings per share 20.3 20.2 -0.5%
Ordinary Dividend 20cps 22cps 10%

Source: Spark NZ Ltd annual report. All numbers in NZ$

The numbers may look dull, but reflect a solid result for investors. When revenue is adjusted for various divestments throughout the year it actually increased by 2.5%. Earnings per share also looked good, coming in just above the average of analysts’ expectations according to Reuters.

But the main reason in my view to own shares in Spark New Zealand today would be the great dividend. Spark’s annual (ordinary) dividend will come to (NZD) 22 cents per share (cps), fully imputed, plus a 3 cps bonus dividend. At today’s exchange rate that represents a huge dividend yield of 6.7%.

Safe haven, or risky bet?

The yield is certainly attractive in such a low interest rate environment, but does that make Spark a safe haven for income investors?

The company has strong and stable free cash flows which ticks the first box, while its dividend approach aims to “deliver a rising dividend profile over the long-term” as earnings grow which certainly meets income investor needs.

Recently that has been enough of a catalyst to drive up the share price on both sides of the Tasman as investors pile in and escape record low interest rates.

Spark shares have jumped 14% so far this year, which given the company’s relatively low growth profile suggests it is being increasingly seen as a type of utility.

This is understandable, but from a value investing perspective I would be cautious about paying a premium price for a company with a fairly standard earnings outlook.

To me Spark appears to be selling at a premium compared to Telstra Corporation Ltd (ASX: TLS) which hasn’t seen the same pick up with its share price, despite announcing a $1.5bn share buy-back in addition to growing the annual dividend by 1.6%. This may be because of the expected fall to Telstra’s earnings on completion of the national broadband network.

Foolish takeaway

In the short term, Spark anticipates its ordinary dividend for the full year 2017 to match FY16 and expects it will again be fully imputed. It’s appealing for income investors, but it’s important to be aware that risk is created as more investors pile in and the share price rises.

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Motley Fool contributor Regan Pearson has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.