Let me cut to the chase. I think OpenText (TSX:OTEX) is one of the cheapest quality dividend-growth stocks on the Toronto Stock Exchange right now. I would buy it today and hold it for decades.
Down almost 60% from all-time highs, the Canadian tech stock is valued at a market cap of $5.26 billion. However, the ongoing pullback has increased the forward dividend yield to 5.2% in June 2026.
Moreover, the business continues to post record cloud revenue and rising profits. That gap between a falling price and a strengthening business is the setup long-term investors aim for.
I have followed Canadian software names for years, and I rarely see a profitable market leader priced this cheaply. So, let me walk you through why I believe patient investors will be glad they stepped in here.
Source: Getty Images
Why this cheap Canadian dividend stock deserves your attention
OpenText is forecast to expand its adjusted earnings per share from US$3.82 in fiscal 2025 (ended in June) to US$5.48 in fiscal 2028. In this period, free cash flow is projected to increase from US$687.4 million to US$1.08 billion.
If the dividend stock is priced at 10 times earnings, it could surge 150% within the next 15 months. OpenText is clearly among the cheapest Canadian stocks right now.
Management pays US$0.275 per share each quarter, or US$1.10 a year. That payout has climbed by about 11% per year over the past 10 years, with no reductions. In fact, its annual dividend per share stood at US$0.30 in 2013.
Given an annual dividend expense of US$267 million, OTEX has a payout ratio of roughly 30%. Basically, the Canadian tech stock can easily double its dividend and still have enough cash to target acquisitions and strengthen the balance sheet.
A cheap stock, a growing and well-covered dividend, and rising profits are a rare mix. It is the kind of combination that builds real wealth when you give it time.
The bull case for the TSX tech stock
In its fiscal third quarter of 2026, OpenText reported total revenue of about US$1.28 billion. Its Cloud sales rose 6.6% to US$493 million, the highest in company history. Content is the largest and fastest-growing part of the business, accounting for 44% of total revenue.
Adjusted earnings per share reached US$1.01, a third-quarter record, up 23.2%. The adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) margin came in at a healthy 34.1%. Free cash flow over the first nine months of the year hit US$686 million, up from US$563 million in the same period last year.
The board raised the share buyback program from US$300 million to US$500 million and repurchased 9.7 million shares in the quarter. Since starting its dividend in 2013, OpenText has returned over US$2.2 billion to shareholders through that program.
OpenText now expects cloud revenue growth of 4% to 5% and free cash flow growth of 22% to 25% for the full year.
The Foolish takeaway
New CEO Ayman Antoun, just weeks into the job, framed the opportunity in plain terms on the earnings call. He said OpenText sits right at the centre of the data that companies clean up, govern, and feed into their AI tools. That is a powerful place to stand as AI spending climbs.
However, total revenue growth is modest this year at 1% to 2%. The company carries debt, and a fresh leadership change always raises questions. The stock has lagged the market, and turnarounds take patience.
You are paying a low price for a profitable, cash-generating leader in a US$200 billion information management market. You collect a near 5% yield while you wait, and you let a decade of dividend growth and a steady shift to the cloud do the heavy lifting.
In my view, this is a textbook buy-and-hold-for-decades stock.
