Does today’s Dicker Data share price make it a good dividend buy?

The Dicker Data Ltd (ASX: DDR) share price has been hurt in 2022. It’s down by more than 20% since the beginning of the year.

For readers who haven’t heard of the business, it describes itself as a technology hardware, software, cloud, cybersecurity, access, and surveillance distributor. It sells exclusively to its partner base of 8,200 resellers across Australia and New Zealand.

After the recent decline of the Dicker Data share price, could it actually be an effective pick for dividend income?

A company isn’t necessarily a good income idea just because it pays a dividend. So, let’s look at some of the most recent updates and thoughts regarding the business.

Recent growth

In May, the business gave an update about its 2022 first-quarter numbers.

It said that in the three months to March 2022, its total revenue was $673.6 million, which was up by 50.5% year on year. It also disclosed that profit before tax went up by 22.7% to $23.8 million. Growth can have a material impact on the Dicker Data share price.

Management said that the increase in revenue was partly attributed to a full quarter contribution from the company’s Exceed acquisition, with the rest due to organic growth.

Dicker Data said there has been increased demand for virtual capabilities and accelerated digital transformation across Australia and New Zealand. However, supply chain disruptions have continued and, together with the introduction of its retail business in New Zealand, the gross profit margin finished the quarter lower at 8.6%. However, the full-year margin is expected to be around 9%.

The company is planning for more growth. It’s already in the advanced planning stages for the expansion of its warehouse in Kurnell, Sydney which will support expected growth in the coming years.

Dicker Data has been adding to its count of reseller partners who purchase online. It also said that it’s expecting a “high level of growth” in the adoption of automation, machine learning, and data capture and analysis tools as “businesses and governments prioritise efficiency and productivity within their operations”.

Dicker Data dividend

The company’s current dividend policy is to pay out quarterly. The size of the dividend is 100% of after-tax profit.

Leadership has proposed to increase the full-year dividend by 44% to 54 cents per share.

At the current Dicker Data share price, that equates to a grossed-up dividend yield of 6.8%.

Is the Dicker Data share price a buy?

The broker Morgan Stanley thinks it is, with an ‘overweight’ rating and a price target of $16. That implies a potential upside of around 41%.

The post Does today’s Dicker Data share price make it a good dividend buy? appeared first on The Motley Fool Australia.

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More reading

• Here’s why brokers rate these ASX growth shares as buys
• The Dicker Data share price is trading at YTD lows. Here’s why
• Buying the dip: 3 ASX All Ord shares insiders are loading up on
• The Dicker Data dividend is being paid today. Here’s what you need to know

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Dicker Data Limited. The Motley Fool Australia has positions in and has recommended Dicker Data Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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