1 TSX Dividend Stock That’s Pulled Back 16% – and Looks Worth Buying Right Now

Investing in the Canadian stock market can feel like a roller coaster ride, with ups and downs that test even the most seasoned investors. But for investors who keep their eyes on the long-term horizon, these fluctuations can sometimes offer opportunities to buy quality stocks at attractive prices. One such opportunity seems to have emerged in the tech sector, where a well-known player has seen its stock price pull back significantly from its 52-week high.

This company, Open Text (TSX:OTEX), is a leader in information management, with a robust dividend yield that makes it particularly appealing to income-focused investors. If you don’t know it already, it’s a Canadian software giant that focuses on enterprise software. With its comprehensive information management platform, Open Text stock provides secure and scalable solutions for businesses of all sizes. OTEX stock currently trades at $31.36 per share, giving it a market cap of $7.9 billion.

Open Text stock: A closer look at its recent performance

Open Text’s recent performance has been a mixed bag, with the stock price showing high volatility. Over the last year, OTEX stock has declined by 16%, but it has shown signs of recovery in recent months.

In the second quarter of its fiscal year 2026 (ended in December), the company’s total revenues remained nearly unchanged on a YoY (year-over-year) basis at US$1.3 billion. However, its cloud revenues rose by 3.4% YoY to US$478 million, marking the company’s 20th consecutive quarter of cloud organic growth. Meanwhile, the company’s annual recurring revenue (ARR) climbed by 0.7% from a year ago to US$1.1 billion. These figures highlight Open Text’s ability to adapt and grow in a competitive market, despite macroeconomic headwinds.

More importantly, Open Text’s profitability metrics were also encouraging in the latest quarter, with a net profit margin of 12.7%.

Divesting non-core assets and focusing on AI

Several factors have contributed to Open Text’s recent performance. The company has been actively divesting non-core assets, such as eDOCS and Vertica, to focus on its core enterprise information management for artificial intelligence (AI). This strategy could help it streamline operations and align the business with emerging trends in artificial intelligence and cloud modernization.

Recently, Open Text also announced key leadership changes, including the appointment of Ayman Antoun as chief executive officer (CEO) in April 2026. Its interim CEO, James McGourlay, noted strong growth in the content management cloud business and highlighted customer adoption of Aviator AI solutions at Open Text World. These developments suggest that the company is positioning itself for future growth by investing in innovative technologies and strengthening its leadership team.

Conclusion: A strong buy for long-term investors

Open Text presents a compelling case for long-term investors looking to add a high-quality dividend stock to their portfolio. Despite the recent pullback in OTEX stock price, the company’s strong financial performance, strategic divestments, and commitment to innovation position it well for future growth.

Overall, with a quarterly dividend yield of 4.8% and a robust cash flow engine, Open Text can give long-term investors a stable income stream while they wait for the stock to rebound. As the company continues to execute its long-term growth initiatives, smart investors may want to consider adding this tech giant to their portfolios.

The post 1 TSX Dividend Stock That’s Pulled Back 16% – and Looks Worth Buying Right Now appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has positions in Open Text. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.