From DDR to ALU, TNE: ASX midcap dividend stocks from tech space

Highlights

• Dicker Data attributed its strong growth in 1H22 to the digital transformation of different sectors in Australia and New Zealand.
• During FY22, CarSales.com reported 23% growth in Net Profit after Tax.
• During H122, Technology One reported strong growth in its SaaS business.

Investing in dividend stocks is a prudent way to reap stable earnings from the stock market. Commonly, large, and well-established companies reward their investors in form of dividends compared to small and developing companies.

In this article, we at Kalkine Media® will discuss five dividend stocks from ASX-listed mid-cap companies in the technology sector. The mid-cap stocks are chosen on the basis of market capitalisation between 2 billion to 10 billion. These stocks' annual dividend yields range from 1 to 4%, which is comparatively lesser than other sectors. This might be because technology companies incur huge expenses in research and development activities, due to which they reinvest their profits in the business despite paying out dividends.  

Dicker Data Ltd (ASX:DDR)

Dicker Data is one of the top distributors of ICT hardware, software, cloud and IoT solutions for reseller partners in Australia.

Recently, the company announced a dividend amount of AU$0.13 per security. In the first half of FY22, the company reported a 36% surge in revenue, a 20% surge in EBITDA, and an 11% growth in operating profit before tax. The company attributed the revenue growth to a full six-month contribution from the Exeed acquisition in August. For FY22, Dicker Data is anticipating a gross margin of about 9%.

In H122, the company attributed its solid progress to the digital revolution of different sectors in Australia and New Zealand. However, the company reported challenges in stock and logistics that are forecasted to continue to 2023.

Iress Ltd (ASX:IRE)

Iress provides software solutions for financial services. It operates across multiple regions including the Asia Pacific, Europe, Africa, and North America.

The company recently announced a dividend of AU$0.16 per security. In the first half of FY22, the company’s Constant Currency Segment Profit surged by 6%, whereas underlying NPAT went up by 29%. There was also a 32% increment in underlying earnings per share. The company is expecting full-year results at the lower end of the guidance range, with around 25% growth in NPAT.

Similarly, the company’s operating revenue increased by 6% compared to 1H21 and 1% compared to 2H21. The company attributes this increment to growth in APAC Trading & Market Data, Financial Advice, Superannuation, Mortgages and North America.

During the reporting period, the UK business segment of Iress achieved some significant milestones, including the execution of a new sales structure, and growth in Private wealth.

Carsales.Com Ltd (ASX:CAR)

Carsales.Com is an online marketplace for automotive, motorcycle and other businesses. During FY222, the company reported strong growth in revenue and earnings. Let us have a look

• 19% growth in reported revenue
• 12% growth in reported EBITDA
• 23% growth in NPAT

The company also witnessed strong international performance. It had double-digit revenue and EBITDA growth in Brazil, US, and Korea. Similarly, it bolstered its growth in all major markets with a rise in customer engagement compared to pre-pandemic levels and good growth in new products. Carsales also progressed the remaining 51% of the acquisition of Trader Interactive in the US.

Altium Ltd (ASX:ALU)

Altium provides software for different sectors such as automotive, aerospace, medical devices, and consumer electronics. The company’s performance highlights for FY22 are as follows:

• A revenue growth of 23% with an underlying EBITDA margin of 36.7%
• 30% surge in operating cashflow
• 57% growth in Profit After Tax to US$55.5 million
• Growth in Earnings Per Share (EPS) by 57% to US$42.2 cents
• Final dividend of AU 26 cents

The company’s guidance for FY23

• 15%-20% growth in total revenue
• 15%-18% growth in Electronic Design Software Business
• 20%-30% growth in Engineering Cloud Platform Business
• 35%-37% margin in underlying EBITDA

For FY26, the company targets total revenue of US$500 million and an underlying EBITDA margin of 38%-40%.

Commenting on the results, the company’s CEO stated that the strong financial performance was supported by a record performance in the Octopart business and robust growth in the Electronic Design Software business. He also mentioned that the company’s digital sales have augmented efficiency and have attained a higher realised price with minimal discounting.

Technology One Ltd (ASX:TNE)

Technology One is a software company based in Australia. The company is driven by the belief in enabling a digital revolution, an enterprise solution, and simple to use software.

In the half year ended 31 March 2022, the company’s revenue from ordinary activities boosted by 19%. Similarly, its net profit to members increased by 18%. The company’s basic earnings per share were 10.28 cents compared to 8.80 cents in FY21. Other highlights for the period are as follows:

• 44% increment in SaaS annual recurring revenue (ARR)
• 21% increment in expenses
• 20% increment in Research and Development expenditure
• Over 100% increment in UK profit

As per the company, its SaaS business has grown strongly. The annual recurring revenue driven by SaaS soared by 44% on growing the number of large-scale enterprise SaaS customers by 24%. Further, the company had some organic growth during the period. During the first half, the company partnered with 19 large-scale enterprise customers. In late calendar 2021, the company acquired Scientia as a strategic addition.