A Canadian Dividend Pick Down 37%: A Forever Hold

Sharp market pullbacks can make even strong companies look risky in the short term. But for long-term Foolish investors, those periods could also create some of the most attractive opportunities to buy quality businesses at discounted prices. What matters most is knowing the difference between companies facing temporary market pressure and businesses experiencing deeper structural problems.

And OpenText (TSX:OTEX) appears to fall into the first category right now. Despite a difficult year for its share price, the company continues generating recurring revenue, investing in future growth areas like cloud and artificial intelligence (AI), and rewarding shareholders with a solid dividend along the way. In this article, I’ll explain why OpenText stock deserves a closer look today — especially after such a big pullback.

A dividend-paying tech company focused on managing enterprise data

Headquartered in Waterloo, OpenText provides information management software and services to businesses, governments, and organizations across the globe.

Its platform helps customers securely manage data, modernize applications, automate workflows, and optimize digital operations. The company offers a wide range of services, including content management, cybersecurity, analytics, business networking, app modernization, and IT operations solutions.

At the time of writing, OpenText stock traded at $33.81 per share with a market cap of roughly $8.2 billion. After a decline of nearly 37% over the last seven months, OTEX stock still offers investors a very attractive dividend yield of 4.4%, paid quarterly.

Recent performance highlights resilience

Although OpenText shares have struggled recently, the company’s latest quarterly results suggest the business remains resilient. In the third quarter of its fiscal 2026 (ended in March), OpenText generated US$1.3 billion in total revenue, up 2.2% (year over year) YoY, while its cloud revenue rose 6.6% from a year ago to US$493 million. The company also delivered its 21st consecutive quarter of cloud organic growth, highlighting continued demand for its enterprise cloud offerings.

One of OpenText’s biggest strengths remains its recurring revenue model. In the latest quarter, annual recurring revenue climbed 2.7% YoY to US$1.1 billion, supporting its stable cash generation despite broader economic uncertainty. As organizations increasingly prioritize cybersecurity, compliance, and AI-driven data management, demand for its secure enterprise information platforms continues to grow.

More importantly, the company also posted much stronger profitability as its GAAP (generally accepted accounting principles) net profit jumped 86% YoY in the March quarter to US$173 million, while diluted earnings doubled to US$0.70 per share. OpenText’s strong cash generation also allowed it to return US$313 million to shareholders through dividends and share repurchases during the quarter.

Strategic partnerships could support future growth

OpenText continues expanding its cloud capabilities in highly regulated markets. The company recently announced plans to make several enterprise data and AI solutions available through Amazon’s AWS European Sovereign Cloud. This move could help its European clients meet strict regional data protection and sovereignty requirements while modernizing their cloud infrastructure.

Similarly, the software firm partnered with S3NS — a joint venture between Thales and Google Cloud — to develop sovereign cloud solutions for Europe. These partnerships could strengthen OpenText’s position in industries where compliance and data protection remain top priorities.

Another encouraging sign is the company’s growing enterprise cloud momentum. In the latest quarter, OpenText’s enterprise cloud bookings surged nearly 30% YoY to US$196 million, reflecting continued customer demand for its cloud-based offerings.

Why this dividend stock could be a forever hold

While OpenText isn’t creating the same buzz as many AI stocks, its stable revenue, enterprise software demand, and solid dividend continue to stand out. The company continues generating billions in annual revenue while consistently expanding its cloud, cybersecurity, and AI-focused capabilities.

Meanwhile, investors are also getting paid to wait with its 4.4% dividend yield, while its management continues returning capital through share repurchases. Given all these factors, OpenText looks like a great Canadian dividend stock to buy at current levels and hold for many years.

The post A Canadian Dividend Pick Down 37%: A Forever Hold appeared first on The Motley Fool Canada.

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Fool contributor Jitendra Parashar has positions in Amazon and Open Text. The Motley Fool recommends Alphabet and Amazon. The Motley Fool has a disclosure policy.