Hi everyone two things to share with you today. The first, today is my 37th birthday. The second is I will share with you another tech stock I purchased. In the beginning it was planned to share both the Open Text and Enghouse purchases on the same blog post, but it would have been a really long post so I decided to break it up.
Going into both of the purchases my portfolio was pretty weak in the technology sector, I own Microsoft and Texas Instruments in my RRSP account, however the positions are small at the moment. On June 9th I started a position in Enghouse Systems (ticker: ENGH.TO)
About Enghouse Systems
- Enghouse Interactive specializes in communications software and services that are designed to enhance customer service, increase efficiency and improve person to person communications across the enterprise.
- Enghouse Networks delivers comprehensive technology solutions for next generation telecommunications network operators.
Enghouse Transportation develops and delivers solutions for public and private transportation industries through innovative computerized applications and consulting support.
(Source: company website)
Like Open Text acquisitions form a big part of Enghouse’s growth plan strategy. On the company’s website they have a profile of what they look for when thinking about buying a company, I will share it below.
- Software companies (public or private) with revenue greater than $5 million
- Preferred geographies: North America, UK, Europe, Nordics, APAC
- Preferably with a strong recurring revenue stream (maintenance, hosted or subscription based revenue)
- Software Companies involved in these sectors:
- Contact Center (customer interaction/engagement)
- Transportation/Fleet Management/Logistics
- Telecom Service Providers Software (billing, OSS, BSS, provisioning, IN, number portability, fraud, security, etc…)
- Geographic Information Systems (GIS) software based products
- New Sectors
- Fragmented industries
- Target software company with revenue over $20 million
(Source: Company website)
So far this year we only have financial numbers for Enghouse Systems through it’s second quarter which ended on April 30th. This gives investors a glance at the company through the first six to seven weeks of the pandemic. So far the pandemic has been a positive for the company for parts of it’s business. There has been increased demand for it’s remote work and visual computing solutions.
2nd Quarter Highlights
- 58% increase to it’s revenue
- quarterly profit of $27.1 million up from $16.5 million
- Cash flows from operating activities increased 51.8%
- Closed the quarter with $168.1 million in cash
Enghouse Systems have paid a dividend since 2007, and have raised it for 12 consecutive years. The company currently pays a quarterly dividend of $0.135 per share. The stock currently yields a tiny 0.65% which is very small however like I mentioned above the dividend has been raised for 12 straight years. With this stock you get both capital appreciation and dividend growth. A win win for every investor.
I purchased 8 shares @ $65.17 per share. With this purchase my quarterly dividend income will increase by $1.08 and annually by $4.32. Not very much at the moment but I expect it to grow over time.
Thanks for reading!