RRSP Season: 1 Inventory I’d Purchase and Neglect

Registered Retirement Financial savings Plan (RRSP) season has a humorous approach of constructing everybody really feel rushed. Don’t fall for it. The most effective RRSP buys typically look boring within the second, as a result of the true win comes from letting time and tax deferral do the heavy lifting. Whenever you tuck a long-term compounder into an RRSP, you give it years to develop with out tax friction, and also you keep away from the temptation to commerce round headlines. And proper now, this tech inventory appears like a surprisingly good choice.

OTEX

OpenText (TSX:OTEX) sells enterprise software program that helps massive organizations handle, safe, and use their info. Assume content material administration, safety, IT operations instruments, and analytics that sit behind the scenes in banks, governments, and large industrial corporations. It additionally leans into synthetic intelligence (AI) by its Aviator choices, which purpose to assist prospects search, summarize, and automate work inside their very own information whereas staying compliant. That positioning permits corporations to make use of AI features with out handing over delicate information to an outdoor platform.

The final 12 months for OpenText appeared like a clean-up and refocus section. It continued digesting the Micro Focus acquisition, pushed more durable towards subscriptions, and talked brazenly about simplifying the portfolio after earlier divestitures. It additionally managed a management change. In its February 2026 replace, the dividend inventory referenced a transition to Ayman Antoun as CEO, with a gradual hand promised by the handoff.

OpenText additionally saved returning capital, which alerts confidence within the money engine even whereas it reshapes the product combine. Within the newest quarter, it returned US$119 million, together with dividends and share repurchases. That doesn’t assure progress, however it suggests money era can fund reinvestment and shareholder returns on the similar time, which inserts an RRSP mindset.

Into earnings

Now for the numbers that matter. In its second quarter of fiscal 2026, ended Dec. 31, 2025, OpenText reported whole income of US$1.3 billion. Cloud income was US$478 million, up 3.4% 12 months over 12 months, and it logged its twentieth consecutive quarter of natural cloud progress. GAAP internet earnings was US$168 million, and adjusted earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) was US$491 million, a 37% margin. It additionally produced working money stream of US$319 million and free money stream of US$279 million.

These outcomes inform a easy story. Income held regular, cloud saved inching larger, and profitability stayed sturdy for a corporation promoting to sticky enterprise prospects. The wrinkle is that GAAP internet earnings fell 12 months over 12 months, and working and free money stream additionally dipped from the prior-year quarter. Timing can clarify a few of that, however it nonetheless issues, as long-term holds solely really feel forgettable when money stream stays reliable.

Wanting forward, OpenText framed fiscal 2026 as a return to modest progress after divestitures. It pointed to a full-year outlook that targets 3% to 4% cloud income progress and 1% to 2% whole income progress. That’s not thrilling, however that may swimsuit an RRSP method constructed on persistence and reinvestment.

Backside line

OpenText might be a purchase for RRSP buyers who need a cash-generative Canadian tech identify with recurring income and a sensible path to gradual enchancment. Proper now, right here’s what the 4.2% yield may usher in whereas buying and selling at a worthwhile 14 instances earnings from an funding of simply $7,000.

It might be a miss for anybody who wants fast progress or hates transition tales. If you wish to purchase it and neglect it, watch one factor: regular cloud progress paired with regular free money stream, quarter after quarter, with no excuses.