Information technology is a high-growth sector where many tech stocks reward investors with fantastic, if not parabolic, returns sometimes. This year has not been excellent, performance-wise (+4.85% year to date), although the sector holds steady amid a unique environment.
A common observation about the sector is the few options for income-focused investors. It is rare for growth-oriented companies to pay dividends. On the TSX, Enghouse Systems Limited (TSX:ENGH) is a gem. The global provider of enterprise software solutions is not only a dividend payer but also a dividend grower.
Believe it or not, ENGH pays a hefty 5.13% dividend and has increased the payouts yearly since 2009. The current share price is $23.47, with a year-to-date loss of -11.55%. Nonetheless, if I’m a Tax-Free Savings Account (TFSA) user, I’d still put my entire 2025 TFSA contribution into this beaten-down tech dividend titan for good reasons. A $7,000 investment will generate $89.78 in tax-free quarterly income.
Enterprise software company
Enghouse Systems develops and sells enterprise-oriented applications software to various vertical markets. The $1.29 billion software and services company cater to different sectors, including communications and media, defence, and utilities. Two core business segments, Interactive Management Group (IMG) and Asset Management Group (AMG), are the revenue contributors.
Management plans to complete selective acquisitions within existing markets. Moreover, Enghouse will enter new strategic software markets on an opportunistic basis. The acquisition strategy aims to consistently generate positive operating cash flows, which will fund further growth and drive shareholder value. It should also minimize shareholder dilution.
Enghouse will focus on companies with strong recurring revenue, ideally revenues ranging between $5 million and $50 million. The prospects (both public and private) should likewise have the potential for geographic, product, or scale expansion, as well as long-term sustainability.
Consistent profitability
Enghouse has been profitable over the last four years, with an average of $85.2 million in net income annually. In the first half of 2025, revenue increased 1% to $248.8 million versus the same period in 2024, while net income declined 7.2% year over year to $35.4 million.
Management attributes the profit drop to increased direct and operating costs, not to mention increased volatility in foreign exchange markets. Due to broader macroeconomic uncertainty, some Enghouse customers opted to delay capital investment or assess the potential impact of today’s rapidly changing trading environment.
Its chairman and CEO, Stephen J. Sadler, said, “Over the last six months, we completed three acquisitions that have strengthened our long-term outlook but have adversely impacted near-term earnings.” Enghouse Systems’s most recent acquisition is Trafi in Lithuania. The scalable and comprehensive Mobility-as-a-Service platform enhances Enghouse’s transportation mobility solutions portfolio.
Strong momentum
Sadler assures that Enghouse Systems entered the second half of the year with a clear operational focus, a healthy cash position, and strong momentum from recent acquisitions. He remains confident that the current moves will result in improved growth and profitability.
ENGH reached a 52-week high of $34.42 and is likely to return to this level when it recovers. The uninterrupted quarterly dividend payment since the second quarter of 2007 adds confidence to invest in this tech gem.
