Open Text Corp., Canada’s second-biggest software services company by market value, surged the most in more than two years after it said yesterday it will pay a dividend for the first time.
Open Text, based in Waterloo, Ontario, rose 12 percent to C$64.91 at 4 p.m in Toronto today, the biggest jump since August 2010.
The shares have gained 17 percent this year, for a market value of C$3.8 billion ($3.7 billion), compared with a 0.8 percent loss for the Standard & Poor’s TSX/Composite index.
Open Text declared an initial quarterly dividend of 30 Canadian cents a share, payable June 21, giving it an indicated yield of 1.9 percent. The company also reported adjusted first-quarter earnings of $1.26 a share, short of average estimates of $1.30, according to a Bloomberg survey of 15 analysts.
Tom Liston, analyst at Cantor Fitzgerald LP, raised his rating for Open Text to buy and increased his price target to $68 from $60 on revenue license growth and “strong” cash flow. The stock has nine buys, three holds and three sells for the stock with an average 12-month price target of C$69.66, according to data compiled by Bloomberg.
“The dividend expands the universe of potential investors and we expect that it will be well-received,” Liston said in a note to clients today.