Turning your Tax-Free Financial savings Account (TFSA) right into a millionaire’s portfolio may look like a protracted shot. However it all begins with choosing the right shares and giving them time to develop. With synthetic intelligence (AI) taking centre stage throughout industries, tech shares with real-world purposes and regular income are prime candidates. One Canadian firm main the cost is OpenText (TSX:OTEX). It might not have the flash of newer AI startups, however it has all of the instruments to thrive in the course of the subsequent bull market and energy long-term TFSA progress.
About OpenText
OpenText has been a dependable participant within the enterprise software program house for many years. It helps massive companies handle digital info, all the pieces from paperwork and emails to safety and compliance. Just lately, the AI inventory pivoted aggressively into cloud and AI, embedding AI into its core merchandise to assist companies automate and make smarter choices.
In its most up-to-date earnings report for the third quarter of fiscal 2025, OpenText reported income of US$1.25 billion. That was barely beneath analyst expectations, however the extra essential determine was its adjusted earnings per share (EPS), which got here in at US$0.82. That beat estimates and confirmed strong management over prices. Recurring income made up 83% of the whole, together with US$457 million from cloud subscriptions. For traders, that stage of predictability issues. It provides the AI inventory a steady money circulate to reinvest in progress, pay down debt, and return capital to shareholders.
Right here for traders
Talking of returns, OpenText paid out US$69 million in dividends and acquired again 7.7 million shares in the course of the quarter. It’s on monitor to return about US$570 million to shareholders in 2025. That features dividends and buybacks, giving traders a mixture of earnings and potential upside. The annual dividend sits at round $1.44, at a 3.66% yield as of writing.
OpenText trades at about $39 per share with a market cap of simply over $10 billion. Its price-to-earnings ratio is slightly below 12, which appears to be like low-cost for an AI inventory that’s delivering constant revenue and has a rising AI technique. Analysts anticipate earnings progress of round 7.4% yearly, with return on fairness projected close to 27% within the subsequent three years. That mixture of earnings, progress, and reinvestment makes it a compelling alternative for a long-term TFSA.
Future in focus
AI is not hype for OpenText. Its platform consists of AI Aviator, which brings automation to enterprise search, contract evaluation, and customer support. It additionally helps companies detect and defend towards cyber threats utilizing machine studying. These will not be science initiatives. They’re absolutely built-in options utilized by main firms throughout industries.
The AI inventory has additionally taken steps to streamline operations. In 2024, it introduced a restructuring that included about 1,200 layoffs. Whereas robust, the transfer is predicted to save lots of as much as US$200 million per yr, which improves margins and helps its long-term progress plans. That’s additionally freed up about US$50 million yearly for innovation, product improvement, and AI growth.
Subsequent up for OpenText is its fiscal fourth quarter earnings report, anticipated in late July. That would present extra readability on how its AI and cloud technique is evolving. If the AI inventory continues to ship regular income and revenue progress whereas protecting prices in examine, it may earn extra consideration and the next valuation in the course of the subsequent bull run.
Backside line
For TFSA traders trying to construct long-term wealth, OpenText is a beautiful choice. It gives sturdy fundamentals, a rising function in AI, reliable dividends, and shareholder-friendly administration. It’s the type of AI inventory that gained’t shoot the lights out in per week, however over years, it has actual potential to compound steadily. In case your objective is to show your TFSA into one thing greater, OpenText might be the kind of AI inventory that leads the cost when the market rallies once more.
