The Motley Fool

Results: Is Dicker Data the best ASX dividend share to buy today?

The Dicker Data Ltd (ASX: DDR) share price has avoided the market selloff on Wednesday and stormed higher.

In afternoon trade the shares of Australia’s largest and longest established Australian-owned distributor of information technology products are up 5% to $4.53.

In earlier trade Dicker Data’s shares were up as much as 9% to an all-time high of $4.69.

Why did Dicker Data’s shares shoot higher today?

Investors have been fighting to get hold of the company’s shares following the release of a very positive first quarter update.

According to the release, the company achieved revenue of $386.9 million in the first quarter. This was a 21.1% increase on the prior corresponding period and was driven by the strong performance of existing vendor partnerships and the benefits of new vendors.

On the bottom line things were even better. Dicker Data reported a quarterly profit before tax of $13.5 million, up a massive 46.7% on the prior corresponding period.

Profits have grown even quicker than revenue thanks to its costs as a percentage of sales falling, resulting in its profit before tax margin improving to 3.5% from 2.7%. Though, this is only expected to be temporary due to a significant increase in working capital investments.

What now?

Despite the impressively strong quarter, management has resisted the temptation to lift its guidance for the full year and has re-iterated its full year pre-tax profit guidance of $51.4 million for FY 2019.

But considering the strong share price rally today, I suspect the market believes management is being conservative and that Dicker Data will deliver another stronger than expected full year result.

Should you invest?

Dicker Data is one of my favourite dividend shares on the Australian share market and today’s result has only reinforced this view.

Although its shares have charged higher today, I still see a lot of value in them for income investors. After all, based on management’s previous dividend guidance for FY 2019, its shares still provide a fully franked 4.9% dividend yield.

Overall, I would rate it as a buy along with National Storage REIT (ASX: NSR), Rural Funds Group (ASX: RFF), and these dividend shares.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited and RURALFUNDS STAPLED. The Motley Fool Australia has recommended National Storage REIT. 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 Scott Phillips.

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