If you’re on the prowl for stocks with high and reliable distributions to add to your income portfolio, then you’ve come to the right place. Let’s take a closer look at two with yields of 5-8% that you could buy right now.
Sienna Senior Living Inc.
Sienna Senior Living Inc. (TSX:SIA) is one of Canada’s leading providers of care and services for seniors. It provides independent living, independent supportive living, assisted living, memory care, and long-term care through its operation of 56 residences. It also provides management and consulting services to other operators in the industry.
Sienna pays a monthly dividend of $0.075 per share, representing $0.90 per share on an annualized basis, which gives its stock a yield of about 5.2% today.
An income stock with a high yield is great, but we must also confirm its reliability, and Sienna easily passes this test. It has paid dividends every month since its initial public offering in March 2010, and it has maintained its currently monthly rate since December 2012.
I think investors can count on Sienna for a reliable income stream going forward as well. I think its very strong financial performance, including its 7.4% year-over-year increase in adjusted funds from operations (AFFO) to $1.46 per unit in 2016, and its vastly improved dividend-payout ratio, including 61.6% of its AFFO in 2016 compared with 66.2% in 2015, could allow it to continue to maintain its current monthly dividend rate for decades, or allow it to announce a slight hike in the very near future.
SIR Royalty Income Fund
SIR Royalty Income Fund (TSX:SRV.UN), or “The Fund” for short, owns the trademarks and trade names related to the SIR Corp.’s restaurant brands, including Jack Astor’s Bar & Grill, Alice Fazooli’s, and Reds Wine Tavern, and it licenses these properties to SIR Corp. in exchange for a royalty of 6% of sales at the 57 restaurants in its royalty pool.
The Fund pays a monthly distribution of $0.095 per unit, representing $1.14 per unit on an annualized basis, and this gives its stock a yield of about 7.8% today.
Like Sienna, The Fund is a very reliable income provider. It has paid distributions every month since its inception in October 2004, and it has maintained its current monthly rate since June 2013.
I think The Fund will continue to be a reliable income provider in the years ahead too. I think its very strong generation of distributable cash, including $8.65 million ($1.13 per unit) in 2015 and $9.06 million ($1.15 per unit) in 2016, its sound payout ratio, including 99.1% of its distributable cash in 2016, and its growing royalty pool, including its addition of two net new restaurants in 2016, will allow it to continue to provide its unitholders with monthly income for another 12 years at least.
Which should you buy today?
Sienna Senior Living and SIR Royalty Income Fund can provide your portfolio with high and reliable streams of monthly income, so take a closer look at each and consider investing in one of them today.
