Adding Tech To My TFSA Part Two

enghouse-interactive

 

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 serves a number of distinct vertical markets through its three divisions, each developing and selling enterprise oriented applications software. The three divisions are:
Enghouse Interactive
  • 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

  • Enghouse Networks delivers comprehensive technology solutions for next generation telecommunications network operators.

Enghouse Transportation

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.

ACQUISITIONS PROFILE

    • 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

Dividend 

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.

The Purchase

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!

Matthew

10 thoughts on “Adding Tech To My TFSA Part Two

  1. Happy Birthday Matthew!

    I like what you have to say about your recent purchase. Good Luck! Thou I am not sure if the yield on this is attractive enough for me to buy into. I truly agree with your analysis and the fact that its growing dividend for the past 12 years.

    Liked by 1 person

  2. Hi Matthew,

    I have never been able to open any of the links in your emails. Am also unable to cut and paste the links. Have others had the same issues?

    Regards,

    Bernie Klunder

    Liked by 1 person

  3. I hope your purchases work out well. I haven’t held a tech stock since I got burned badly in the early 2000’s crash. I said never again, and I’ve kept my promise since. I just collect my dividends from other Canadian sectors.

    Anyhow, a belated Happy Birthday Matthew. All the best.

    Liked by 1 person

    1. Thanks Graham! I think overall tech will be a small part of my portfolio. Sorry to hear what happened to you in the early 2000s it is always tough when that happens. Have a great weekend!

      Like

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