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1 BIG dividend share I’d consider before Harvey Norman Holdings Limited

With a 6.9% fully franked dividend yield, it’s hard to go past Harvey Norman Holdings Limited (ASX: HVN) shares for income. However, Dicker Data Ltd (ASX: DDR) shares boast an equally impressive dividend yield.

My problem with retailers

I don’t think I have ever owned Harvey Norman shares for dividends — regrettably. Instead, a few years back, I bought Myer Holdings Ltd (ASX: MYR) shares — double-regret.

However, I don’t often buy shares in retail companies because they make me nervous. The industry is competitive, profit margins can be squeezed by things like ‘warm weather’, they are capital intensive (e.g. they take the risk of buying next year’s gadgets) and the threat of online is ever present.

Alongside JB Hi-Fi Limited (ASX: JBH), Harvey Norman is Australia’s premier retailer of electrical goods and furniture. However, there is another ASX business distributing electrical products that I would consider running the ruler over today. It also pays a great dividend.

1 BIG dividend share I’d consider before Harvey Norman

Dicker Data is likely a name not familiar to many people. Dicker Data is a $375 million company which distributes computer hardware and accessories throughout Australia.

It is forecast to pay 6.7% in fully franked dividends over the next year, payable quarterly. Its dividend has been growing consistently.

The company is founder run, and its directors hold big stakes in the business, which helps align their interests with shareholders.

However, since it is a distributor of IT equipment with loads of debt on its balance sheet, an investment in Dicker Data shares is not without risk, so investors should go into this one with their eyes wide open.

However, at today’s prices, there is plenty on offer for shareholders, including dividend income and modest long-term growth potential.

I think Dicker Data shares are worthy of a spot on watchlists and further research at current prices.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes and encourages your feedback. You can follow him on Twitter @OwenRask.

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.

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