Income Investors: This Stock’s Dividend Is Growing 15% Per Year

Are you looking for a stock that regularly increases its dividend payout? Look no further than Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX). We’ll look at just how big the dividend increases have been.

| More on:

If you are an income investor, you might salivate at the prospect of high dividend yields or stocks that regularly increase dividends. Today, we highlight a stock that meets the second criteria: Open Text Corp. (TSX:OTEX)(NASDAQ:OTEX).

Open Text’s dividend offering

Open Text doesn’t have a long history of dividends. The company only started paying them in 2013. One thing that’s always been nice is the dividend is paid in U.S. dollars, giving investors increased income. The stock currently pays a quarterly dividend of US$0.132 and has a yield of 1.63%. That yield doesn’t seem great, but the company has been steadily increasing its dividends ever since it started paying them.

Earlier this year, the payout was U.S.$0.115 per quarter, and that was an increase from US$0.10 in 2016’s first quarter. The first dividend back in 2013 was only US$0.075 per share. In the four years since Open Text started paying dividends, it has increased by approximately 15% per year. Those are great numbers to see and should please anyone looking for a side of income in their stock portfolio.

How the stock looks overall

If you are thinking of investing, you should look at more than just dividends. The company has reported some nice profits this year and had good first-quarter 2018 results in early November. There have been concerns about the company’s debt levels. These are due to the company making a series of acquisitions, including a purchase of Guidance Software that was completed in September. (Guidance Software specializes in forensic security.) Too much debt is always something to be aware of, but Open Text currently has good cash flow, enabling it to meet its debt obligations. The stock’s trailing P/E ratio is high in the 72 range, so earnings don’t come cheap.

Bottom line

Open Text produces good numbers, has impressive profits and cash flow, and an ever-increasing dividend. Its earnings are expensive, but, overall, I like this company. If you are looking for a dividend-paying stock to add to your Foolish portfolio, Open Text Corp. deserves a second look.

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 Susan Portelance has no position in the companies mentioned. The Motley Fool owns shares of Open Text. Open Text is a recommendation of Stock Advisor Canada.

More on Dividend Stocks

a man relaxes with his feet on a pile of books
Dividend Stocks

CPP Pensioners: Watch for These Important Updates

The CPP is an excellent tool for retirees, but be sure to stay on top of important updates like these.

Read more »

Technology
Dividend Stocks

TFSA Investors: 3 Dividend Stocks I’d Buy and Hold Forever

These TSX dividend stocks are likely to help TFSA investors earn steady and growing passive income for decades.

Read more »

four people hold happy emoji masks
Dividend Stocks

Love Dividend Growth? Check Out These 2 Income-Boosting Stocks

National Bank of Canada (TSX:NA) and another Canadian dividend-growth stock are looking like a bargain going into December 2024.

Read more »

An investor uses a tablet
Dividend Stocks

A Dividend Giant I’d Buy Over Enbridge Stock Right Now

Enbridge stock may seem like the best of the best in terms of dividends, but honestly this one is far…

Read more »

how to save money
Dividend Stocks

Got $1,000? The 3 Best Canadian Stocks to Buy Right Now

If you're looking for some cash flow from your $1,000 investment, these are the ideal investments to make.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

A Dividend Giant I’d Buy Over BCE Stock Right Now

Don't get sucked in by BCE's 10% dividend -- the stock is a total yield trap. Buy this instead.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Consider Sienna Senior Living for a Stable Monthly Income

Buying this Canadian dividend stock could help you build a dependable monthly income portfolio for the long term.

Read more »

Female raising hands enjoying vacation, standing on background of blue cloudless sky.
Dividend Stocks

Best Beginner-Friendly Stocks to Buy Now in Canada

These top TSX stocks have delivered attractive long-term returns.

Read more »