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When it comes to tech stocks in Canada, the primary attraction for most investors is the growth potential. These stocks often offer above-market returns but may also come with a slightly higher risk profile due to their volatile nature.
However, there are a few tech stocks that also provide consistent returns to their investors via dividends, and three of them stand out from the relatively small group of TSX AI stocks.
An IT Solutions Provider
Converge Technology Solutions (TSX:CTS) is a Toronto-based IT solution provider and a newcomer in the sector. Founded in 2016, the company joined the TSX in 2018. Initially, the stock experienced exceptional growth, rising over 1,100% between May 2018 and September 2021. However, since then, it has been in a prolonged correction phase, with occasional bullish periods.
One advantage of this slump is that the company’s yield is currently at 1.2%. Converge started paying dividends in 2023 and has already increased them by 50%. Even if such rapid dividend growth doesn't continue, it remains a viable dividend pick from the tech sector.
A Software Services Company
For those seeking a relatively old and established company in the tech sector, Enghouse Systems (TSX:ENGH) fits the bill. Founded in 1984 in Markham, Enghouse has undergone multiple growth phases and evolutions. It currently offers software services to various vertical markets through two business groups: interactive management and asset management.
Enghouse has a longer dividend payment history and has grown its payouts consistently enough to earn the title of a Dividend Aristocrat. The dividend growth pace is impressive, more than doubling in the last five years. The current yield is an attractive 3.5%.
An AI Company
While OpenText (TSX:OTEX) is not solely an AI company, it is one of the most prominent names in artificial intelligence within the Canadian tech sector. Essentially an Information Management Systems company, its access to massive amounts of corporate data makes it ideal for AI applications, as AI thrives on data.
The stock has yet to fully benefit from the AI hype and is currently heavily discounted, having lost over a third of its value in 2024 alone. However, this slump has pushed its yield to a decent 3.5%, which is quite attractive for a tech stock. OpenText also has a history of growing its payouts, raising them from $0.17 per share in 2020 to $0.25 per share in 2024.
The tech sector has been in a bear market phase for the last four months, with no clear signs of an imminent recovery. However, this downturn provides investors with an excellent opportunity to pick up dividend-paying stocks from the sector and lock in good yields.
