Shareholders of Data#3 Limited (ASX: DTL) have been treated to a strong gain today after the company, which provides business technology solutions, provided the market with an updated earnings guidance.
The shares surged 18.4% higher to a near 18-month high of 93.5 cents after the company said it expects net profit after tax (NPAT) for the 2015 financial year (FY15) to be in the $10 million to $11 million range. That represents growth of 35% to 45% compared to the previous year's $7.5 million result, driven by both organic and acquisitive growth.
At the same time, cash flow through the year remained strong allowing the group to improve its balance sheet while it expects to maintain its dividend payout ratio in line with previous years. Indeed, the company distributed 89% of earnings as dividends in FY13 and 92% in FY14, so investors can reasonably expect a dividend payout ratio of roughly 90% this financial year.
Assuming earnings come in at the lower end of the forecast range ($10 million) with just under 154 million shares on issue, shareholders could expect a 5.9 cent dividend per share which equates to a yield of 6.3% — fully franked.
That's a spectacular yield in this low interest rate environment and even compares to the forecast 4.8% fully franked dividend yields from the likes of Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS).
Data#3's CEO, Laurence Baynham said: "We are delighted to see the continuing strengthening in our performance in what remains a highly competitive market, and a particularly strong fourth quarter has allowed us to deliver a very solid full year result."
The company will announce its audited full-year results and final dividend on 20 August 2015, but at this stage it certainly looks promising.
