Dicker Data (ASX:DDR) is a distributor of IT hardware and software and cloud products. They source products from the world’s leading technology companies such as Microsoft, Dell Technologies, Cisco, HP, VMware and others. They then distribute those products to a base of some 8,000 resellers who in turn sell to end users. Resellers typically include IT service providers, system integrators, government and education providers.
Dicker Data was co-founded by the Chairman and CEO David Dicker in 1978 alongside his former wife Fiona Brown. Ms Brown remains a director on the board. It listed on the ASX in 2011. Since listing 13 years ago, the share price has grown from $0.25 to $11.40 which equates to a compound annual growth rate (CAGR) of 21%.
They also consistently pay fully franked dividends and the DPS has been growing at a CAGR of 20% over the past five years despite having dipped a little since the peak in 2021. They are currently trading at a healthy forecast dividend yield of 4.2% and unusually for an Australian company, they pay dividends each quarter. The dividend policy is to pay out 100% of earnings as dividends, with a consistent dividend for the first three quarters and then the final dividend determined once the results for the year are known.
They operate on a December financial year end, so the full year results for 2023 will be released on 27 February.
DDR was one of the two technology companies selected for the 2024 Australia and NZ NAPS portfolio due to its high StockRank. Since then the StockRank has slipped from 91 to 83 following small declines in the Quality and Momentum ranks, however it would still make the cut for the portfolio today.
Sales have been growing at a CAGR of 19% over the last five years. They have gone from $1b in 2015 to an expected $3.2b in 2023. In the nine months to the end of September 2023 gross sales grew 8% compared with the same period in the previous year.
More importantly, EPS has grown at 20% CAGR over the past 5 years, meaning that the top line growth is falling through to the bottom line. Sales are not just increasing as a result of acquisitions as is sometimes the case. The dividend payout policy…
