1 Magnificent Canadian Dividend Stock Down 29% to Buy and Hold for Decades

A perfect dividend stock can still look ugly on the chart. The share price drops, the yield pops, and people start assuming something is broken. The best ones stay boring underneath with recurring revenue, solid cash flow, manageable debt, and a payout that doesn’t rely on “perfect” economic conditions. When that kind of business goes on sale, long-term investors get paid twice. Once through the dividend and again if the valuation recovers.

OTEX

OpenText (TSX:OTEX) sells software that helps big organizations manage information securely and turn it into something useful, including for cloud, security, and artificial intelligence (AI) workflows. It focuses heavily on recurring revenue through subscriptions and support, which can smooth results even when spending slows. In other words, it sells the plumbing that keeps enterprise data organized, governed, and protected.

This stock looks “down” right now in a way that actually matters for buyers. The 52-week high sits at $56.00, and recent pricing around $39.83 puts it roughly 29% below that peak. That sort of gap can come from real issues, but it can also come from investor mood swings, especially in tech. Over the past year, performance has been choppy rather than heroic. That tells you the dividend stock hasn’t collapsed, but it also has not convinced the market to pay a premium yet, which can be exactly what a patient dividend investor wants.

Into earnings

Now, the earnings reality check. In its first quarter of fiscal 2026, OpenText reported total revenue of $1.29 billion, up 1.5% year over year, and cloud revenue of $485 million, up 6%. It reported GAAP net income of $147 million, and GAAP diluted earnings per share (EPS) of $0.58, while non-GAAP diluted EPS came in at $1.05.

Cash flow improved sharply in that quarter, which matters more than a pretty headline. OpenText reported operating cash flow of $148 million and free cash flow of $101 million, both much stronger than the same quarter a year earlier. It also posted adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $467 million, which works out to a 36.3% margin. Those numbers suggest the business still throws off meaningful cash even when growth stays modest.

Looking ahead

The forward story in 2026 hinges on execution, not magic. OpenText leaned into cloud growth and positioning around secure information management for AI, and enterprise buyers keep needing better governance, security, and automation. The counterpoint stays simple: enterprise software spending can slow, competition stays intense, and integration from past acquisitions always needs steady hands.

On valuation and income, the dividend adds a nice cushion while you wait. At writing, the dividend stock offers up a dividend yield of about 3.75%, and the company also declared a quarterly dividend of $0.275 per share as part of its regular cash dividend program. When a dividend stock sits well below its 52-week high, that yield can feel like a small apology from the market, paid directly into your account. In fact, right now, here’s what that dividend could bring in from a $7,000 investment.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTOTEX$39.57176$1.49$262.24Quarterly$6,964.32

Bottom line

So, why might OTEX be an ideal dividend stock to buy while it’s down? Because you get a recurring-revenue software business that still produces strong margins and cash flow, plus a dividend that looks covered by earnings and has room to grow over time. The big caveat is patience. The dividend stock can stay cheap longer than you want, and tech sentiment can flip fast. If you can hold for years and keep your expectations realistic, buying a quality dividend payer at a discount can be one of the easiest ways to let time do the heavy lifting.

The post 1 Magnificent Canadian Dividend Stock Down 29% to Buy and Hold for Decades appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.