Mighty River Power is forecasting its profit will more than double in the next couple of years.
In its prospectus to investors, the power company is expecting to make $94.8 million in the June 2013 year, rising sharply to more than $160.4 million the following year.
But stripping out one-off items, Mighty River is picking underlying earnings will decline 15% to $138.4 million.
A measure of how expensive the stock - price to earnings ratio, or P/E - stands at more than 20 by 2014, with listed rivals Contact Energy and Trustpower about 18.
Using yield, or the return on investment, as a guide, the implied gross dividend is at least 6%, which Milford Asset Management executive director Brian Gaynor says should attract the bank savings of potential investors.
He said the company is forecasting a dividend yield of a minimum of 6% and given that many New Zealanders have money in bank accounts where they are getting a maximum of 4.2%.
Mr Gaynor said people are looking for higher interest rates and although shares are a lot riskier than bank accounts, people think that electricity companies are fairly low risk investments.
He says a 6% dividend is going to prove attractive for quite a lot of investors.
Mr Gaynor said the risks highlighted in the investment statement, including the possible closure of the Tiwai smelter, will be reflected in the share price, which is expected to be about $2.60 each, which is in the upper band of the $2.35 to $2.80 a share range.
Investors who hold onto their stock for two years will get a loyalty bonus share for every 25 held.
The Government is aiming to sell a 49% stake, which will earn it between $1.6 - $1.9 billion.
Dividends are assumed to be 12 cents per share in 2013, rising to 13 cents each next year.
