CGI (TSX:GIB.A) is among the most constant wealth compounders in Canadian inventory market historical past. But proper now, the market is virtually providing it at a fire-sale value. The Canadian tech inventory has fallen roughly 50% from its all-time excessive.
I believe that may be a mistake the market will ultimately right, and affected person buyers who purchase throughout this window could possibly be very effectively rewarded. Let me be clear: CGI is a prime TSX dividend inventory decide for buyers seeking to purchase the dip in 2025.
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A 20-year observe document that speaks for itself
CGI is a Montreal-based data know-how and enterprise course of providers large based in 1976. The corporate serves over 5,500 shoppers throughout 400 areas worldwide, using roughly 94,000 consultants and professionals.
Since fiscal 2005, CGI’s share value has compounded at 14.3% yearly, whereas its adjusted earnings per share (EPS) have grown at a compound annual development charge (CAGR) of 15.1%. Put merely, the corporate has quietly turned long-term shareholders into very completely happy buyers for twenty years straight. Valued at a market cap of $18 billion, CGI inventory has returned 1,260% to shareholders for the reason that begin of 2001.
- In its fiscal second quarter of 2026 (led to March), CGI reported $4.2 billion in income, up 3.3% yr over yr.
- Adjusted EBIT (earnings earlier than curiosity and tax) got here in at $692 million, for a really wholesome margin of 16.6%. Adjusted EPS stood at $2.27, up 7.1% from the identical quarter a yr in the past.
- On a trailing 12-month foundation, bookings hit a document $18 billion, up 6% or practically $1 billion yr over yr.
- The book-to-bill ratio was 108%, which means CGI is successful extra new enterprise than it’s delivering. This ratio is a number one indicator of future income development.
Analysts monitoring the TSX tech inventory forecast free money circulate to increase from $2.12 billion in fiscal 2025 to $2.28 billion. With an annual dividend expense of $142 million, the dividend payout ratio is sustainable at lower than 7%. Even when CGI triples its dividend, its payout ratio will likely be decrease than 25%.
CGI’s board not too long ago authorised a quarterly money dividend of $0.17 per share. The corporate additionally elevated its credit score facility by $1 billion, bringing complete capability to $2.5 billion. Its web debt-to-leverage ratio is simply over one, which is conservative.
The corporate returned capital to shareholders by buybacks and dividends whereas persevering with to put money into synthetic intelligence and pursue acquisitions.
“Our pipeline over the subsequent yr validates this as the worth of recent alternatives grew by over 40%,” stated CGI president and chief govt officer François Boulanger.
CGI has an AI moat
CGI is embedding synthetic intelligence instantly into the managed providers contracts it already has with governments, banks, utilities, and different giant enterprises.
- Its AI-powered managed providers platform, DigiOps, now spans practically 200 brokers and 400 workflows.
- Each new managed providers proposal the corporate submits contains superior AI as the usual providing, a significant shift in how CGI delivers worth, and it instantly advantages margins.
- On the consulting facet, Q2 bookings for advisory providers had been up 16% yr over yr.
Boulanger put it plainly on the decision: “Shoppers as we speak aren’t searching for generic AI capabilities. They need options tailor-made to their industries.”
With the tech inventory down sharply from its peak, buyers have a possibility to purchase a enterprise with best-in-class monetary self-discipline, a rising AI-driven pipeline, and a 20-year historical past of compounding EPS at over 15% yearly.
Based mostly on consensus value goal estimates, CGI inventory trades at a 40% low cost as of Could 2026.
