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!

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published July 9, 2024 4:00 pm EDT

| More on: ENGHCTS

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.

A microchip in a circuit board powers artificial intelligence. — Source: Getty Images

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.