These Booming AI Stocks Also Pay Dividends

These AI stocks may already be enjoying some growth, but there continues to be opportunities with a dividend to boot!

| More on:
A microchip in a circuit board powers artificial intelligence.

Source: Getty Images

While the returns of artificial intelligence (AI) stocks can be appealing, usually, there’s a peak. This is why today, we’re going to look at two AI stocks offering just a bit more: dividends.

These two AI stocks may be climbing in share price, but even after those returns stabilize, these companies will continue to hold up their end of the dividend bargain. So, let’s get into them right now.

Enghouse

Enghouse Systems (TSX:ENGH) has been down in the last year but is starting to see some improvements. This means there is little time to take advantage of the company’s 3.39% dividend yield as of this writing.

Enghouse has a robust net cash position, which provides financial stability and the flexibility to make strategic acquisitions. As of recent reports, the company’s net cash was near an all-time high of $226 million, supporting its capital-compounding acquisition strategy.

Enghouse continues to grow through strategic acquisitions, which bolster its market presence and expand its product offerings. Recent acquisitions include the assets of LifeSize Communications Inc. and VoicePort, LLC. These acquisitions are expected to enhance revenue and drive future growth.

Despite a recent dip in share price, Enghouse is considered undervalued by analysts, with estimates suggesting it is trading below its intrinsic value. This presents a potential buying opportunity for investors looking to capitalize on future appreciation. In fact, Enghouse has shown solid financial performance with significant profit growth. For instance, the fiscal second-quarter (Q2) profit jumped 59%, and revenue increased by 11% year over year, driven by successful acquisitions and operational efficiency.

Add in as well that Enghouse Systems has a reliable track record of paying dividends, which is attractive to income-focused investors. The company recently announced a quarterly dividend of $0.22 per share. Altogether, it’s a strong choice to consider.

Converge Technology Solutions

Then we have Converge Technology Solutions (TSX:CTS), with shares up 34% in the last year and a dividend yield of 1.37% as of writing. Converge Technology Solutions has shown a significant rise in investor sentiment and stock performance over recent months despite some volatility. Analysts have a positive outlook on the stock, with an average 12-month price target of $6.63, suggesting a potential upside of around 28.88% from its current price.

The company has been actively expanding its capabilities and market reach through strategic acquisitions. Recent acquisitions include Stone Technologies Group Limited and Newcomp Analytics Inc., which enhance Converge’s offerings in advanced analytics and cloud solutions.

Converge Technology Solutions has shown strong revenue growth, reporting $628.8 million in Q1 2024. Although there was a net loss, the company’s revenue exceeded analysts’ expectations, highlighting its capacity for growth and market expansion.

Plus, there has been notable insider buying, which often indicates confidence in the company’s future prospects. This can be a positive sign for potential investors, suggesting that those with the most insight into the company’s operations and future are optimistic about its performance.

Bottom line

Both Enghouse and Converge Technology Solutions offer compelling reasons for investors seeking growth and dividends. Enghouse Systems provides strong financial stability, strategic acquisitions, and consistent dividends, making it a reliable choice for both income and growth. 

Converge Technology Solutions, with its strategic growth through acquisitions, robust revenue growth, and positive analyst outlook, offers significant growth potential and the beginning of a dividend payout strategy. These attributes make both AI stocks attractive investments for those looking to balance growth and dividend income.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

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

More on Tech Stocks

Hand arranging wood block stacking as step stair with arrow up.
Tech Stocks

Better Buy in July: Passive-Income Plays or Growth Stocks?

Will July mark the beginning of an economic recovery? Should you consider investing in passive income or growth stocks ahead…

Read more »

A chip in a circuit board says "AI"
Tech Stocks

This is the Best AI Stock to Buy Right Now

When it comes to AI stocks, Nvidia stock should jump to mind. But don't forget about the absolute dominance of…

Read more »

Choose a path
Tech Stocks

BB Stock’s Dismal Earnings: I’ll Stay Away

BlackBerry Inc (TSX:BB) stock crashed after earnings. Here's why I'm still staying away.

Read more »

sad concerned deep in thought
Tech Stocks

Is the Worst Over for BlackBerry Stock?

BlackBerry stock has been burning investors' money for the last four years. Is the worst over for this stock? Here…

Read more »

Person uses a tablet in a blurred warehouse as background
Tech Stocks

1 Super Tech Stock (Besides NVIDIA) to Buy Hand Over Fist in 2024

A TSX super tech stock could deliver comparable or far better returns than the AI king across the border.

Read more »

Nurse talks with a teenager about medication
Tech Stocks

Up 42%, Is Now the Time to Buy WELL Health Stock?

WELL Health (TSX:WELL) stock is now up by 42% in the last year, but more growth could be on the…

Read more »

thinking
Tech Stocks

Where Did Shopify Stock Go Wrong?

Shopify (TSX:SHOP) stock may remain on investor radars, but not necessarily in their portfolios. So, what happened?

Read more »

Young Boy with Jet Pack Dreams of Flying
Stocks for Beginners

Beginner Investors: 5 Top Canadian Stocks for 2024

Five Canadian stocks are suitable and profitable investment options for first-timers in 2024.

Read more »