Why I'm banking on Dicker Data Ltd shares

Dicker Data Ltd (ASX:DDR) still offers a 6.7% dividend yield plus franking credits.

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This morning IT hardware distribution business Dicker Data Ltd (ASX: DDR) announced it has signed a new distribution agreement with Japanese IT giant Hitachi Ltd to expand its product offering in the cloud and internet of things hardware space.

Dicker Data imports IT hardware on a wholesale basis to resell to distributors who provide the physical bits and pieces small-to-medium-sized or large businesses require to support their IT operations.

Although the shift to the cloud is about storing data online this phenomenon still requires physical components such as racks, cables, ethernet switches, consoles, monitors and other associated hardware to support it. Consequently, the growing demand for online capability across all business sectors is supporting Dicker Data's and its IT resellers' growth – especially in providing cloud capacity.

Moreover, the Internet of Things (where everyday devices are wirelessly connected to the internet) is commonly touted as the next great technological shift after the cloud, and today's deal with Hitachi is reported to leverage this coming mega-trend.

In turn, Dicker Data also announced today that it has formed a new business unit focused on the "ever-growing digital transformation and internet of things opportunity for resellers in the mid-market and enterprise sector".

The company now counts the likes of Microsoft, Hewlett Packard, Hitachi, Lenovo, Cisco Systems, Toshiba and Samsung among its partners and remains founder led with an experienced management team in place.

Outlook

Despite its digital tailwinds and track record of growth, Dicker Data appears to be under the radar of many investors, which is no bad thing as it still looks on a reasonable valuation with a giant dividend yield.

Selling for $2.45 today the stock changes hands for 15x trailing earnings, with the company confirming it is on track to deliver 9.5% profit growth for FY 2017. That looks good value to me and the kicker is a 6.7% dividend yield that is fully franked with the company retaining a solid growth outlook.

I think this stock remains a buy for growth and income-oriented investors, as this appears a well run company that offers an attractive mix of value, income and growth.

You can't ask for much more than a 6.7% dividend yield as an investor, although there are some other stocks in the IT space with big yields that are worth knowing about! And revealed in the FREE report below….

Motley Fool contributor Tom Richardson owns shares of Dicker Data Limited. The Motley Fool Australia owns shares of Dicker Data Limited. 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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