Q: I am a dividend investor who prefers to hold fewer companies for the long term, gradually adding to the position over time in perpetuity.
5i recently sold OTEX from its Balanced Portfolio. There have been discussions about disruption from AI.
Do you think OTEX remains a viable longterm holding for a dividend investor? Can we expect to see modest continued growth and modest dividend growth - or should this position be sold due to the risks involved?
5i recently sold OTEX from its Balanced Portfolio. There have been discussions about disruption from AI.
Do you think OTEX remains a viable longterm holding for a dividend investor? Can we expect to see modest continued growth and modest dividend growth - or should this position be sold due to the risks involved?
5i Research Answer:
Momentum looks solid currently so markets are liking the signalling that is coming from OTEX. Of course, the real work is yet to be done. At 8X forward earnings, the bar is likely pretty low here for a new CEO to make a mark so we would be fine to continue to hold into some of this momentum. We removed it from the balanced model portfolio, as its valuation and high yield were beginning to look like a value trap, and we saw better opportunities in the market elsewhere. But, its recent moves could be marking a turnaround in the name, and if the market begins to give it a higher valuation, we think it can perform well over the long-term.