Business technology solutions provider Data#3 Limited (ASX: DTL) managed to return to profit growth in the six months ended 31 December 2014, after it initiated a strategic shift towards an increasingly services centric-business model.
The group's net profit after tax rose 39.2% to $3.6 million for the period, supported by a lift in its gross margin (to 15.4%, up from 14.4%) and a 1.8% lift in revenue to $406.5 million. While product revenue declined by 0.9% to $329.7 million, the company increased its focus on services which increased revenue by 16.4% to $75.8 million. This also resulted in an increase in staff costs to support the sales focused plan.
The company said: "With the changes we're seeing in the way our customers are choosing to consume and pay for technology, our strategic shift from primarily product-centric to increasingly services-centric is the right strategy to underpin sustainable growth and long-term shareholder returns."
Data#3 declared a fully franked dividend of 2.1 cents per share, which is a 40% improvement on last-year's interim dividend. Given that it also paid a 3 cent final dividend in September, that puts the stock on a fully franked dividend yield of 6.9%, or 9.8% when grossed up for franking credits. That's far greater than what you'd get from some of the big-name dividend stocks like Commonwealth Bank of Australia (ASX: CBA) or Telstra Corporation Ltd (ASX: TLS).
