These Growing AI Stocks Also Pay Dividends

Written by Amy Legate-Wolfe at The Motley Fool Canada

While the returns on artificial intelligence (AI) stocks can be attractive, there’s usually a peak. So today we’re looking at two AI stocks that offer a little more: dividends.

These two AI stocks could be rising in share price, but even after these returns stabilize, these companies will still honor their end of the dividend agreement. So let’s take a look at them now.

Summer house

Enghouse Systems (TSX:ENGH) has been down in the past year but is starting to see some improvement. That means there is little time left to take advantage of the company’s 3.39% dividend at the time of writing.

Enghouse has a solid net cash position that provides financial stability and flexibility to make strategic acquisitions. The company’s net cash was recently reported to be near a record $226 million, supporting its capitalized acquisition strategy.

Enghouse continues to grow through strategic acquisitions that strengthen 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 increase revenues and fuel future growth.

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

Let’s also add that Enghouse Systems has a solid dividend history, which is appealing to income investors. The company recently announced a quarterly dividend of $0.22 per share. All in all, this is a strong stock to consider.

The story continues

Converged technology solutions

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

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

Converge Technology Solutions has shown significant revenue growth, recording $628.8 million in the first quarter of 2024. Despite the net loss, the company’s revenue exceeded analyst expectations, indicating its potential for growth and market expansion.

In addition, there was significant 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 business and future are optimistic about its performance.

Summary

Both Enghouse and Converge Technology Solutions offer compelling reasons for investors looking for growth and dividends. Enghouse Systems offers 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, solid revenue growth, and positive analyst outlook, offers significant growth potential and the beginning of a dividend strategy. These attributes make both AI stocks attractive investments for those looking to balance growth with dividend income.

The article These Fast-Growing AI Stocks Also Pay Dividends appeared first on The Motley Fool Canada.

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

2024