When it comes to tech stocks in Canada, the primary reason most investors are interested is the growth potential. These stocks often offer above-market returns but may also come with a slightly raised risk profile due to their volatile nature.
However, there are a few tech stocks that also offer more consistent returns to their investors via dividends, and three of them stand out from the rest of the relatively small group.
An IT solutions provider
Converge Technology Solutions (TSX: CTS) is a Toronto-based IT solution provider and one of the newcomers in the sector. The company was founded in 2016 and joined the TSX in 2018. Initially, the stock experienced exceptional growth, and between May 2018 and September 2021, it rose well over 1,100%.
However, since then, it’s been in a brutal correction mode and, apart from some bullish phases, has mostly remained down.
One advantage of this slump is that the company’s yield is currently at 1.2%. The company started paying dividends recently (2023) and has already increased them by 50%. Even if you don’t see dividend growth like this going forward, it’s still a viable dividend pick from the tech sector.
A software services company
If you are looking for a relatively old, established company in the tech sector, Enghouse Systems (TSX: ENGH) may fit the bill. The company was founded in 1984 in Markham and has undergone multiple growth phases and evolutions. Currently, it offers software services to various vertical markets via two business groups — interactive management and asset management.
The company has a relatively longer dividend payment history and has grown its payouts for enough consecutive years to earn the title of an Aristocrat. The dividend growth pace is impressive as well, as they more than doubled in just the last five years. The current yield is an attractive number at 3.5%.
An AI company
While OpenText (TSX: OTEX) is not a pure-breed AI company, it’s one of the most prominent names when it comes to artificial intelligence (AI) in the Canadian tech sector. It is essentially an Information Management Systems company and its access to massive amounts of corporate data makes it ideal for AI tools since AI thrives on data.
The stock has yet to ride this AI hype train, and the stock is currently heavily discounted. It lost over a third of its value in 2024 alone.
However, one benefit of this slump is that its yield is currently at 3.5%, which is quite decent for a tech stock. It also has a history of growing its payouts and has raised them from $0.17 per share in 2020 to $0.25 per share in 2024.
Foolish takeaway
The tech sector has been in a bear market phase for the last four months at least, and we have yet to see any indication of an upcoming recovery. However, this slump gives investors an excellent opportunity to pick up dividend payers from the sector and lock in good yields.
