The stock market in Canada has plunged sharply in the last year, as the TSX Composite benchmark has lost nearly 11% of its value. While this sharp price correction in stocks has affected investors across sectors, some fundamentally strong dividend stocks have continued to reward their investors with handsome dividends. And that’s exactly why you must always hold some quality dividend stocks in your portfolio, irrespective of economic cycles.
In this article, I’ll highlight a top high-yielding Canadian dividend stock that can be a reliable source of monthly passive income for you in 2023 and beyond, despite short-term market challenges.
A top Canadian monthly dividend stock with an 8.9% yield
Before picking dividend stocks to invest in for the long term, you should always ensure that it has a robust business model with a strong possibility of demand growth for its products and services. Following this guideline will help you filter out weak businesses that can come under pressure in a tough economic environment and cut or even discontinue their dividends in the future.
Speaking of fundamentally strong monthly dividend stocks, Sienna Senior Living (TSX: SIA) could be worth considering in 2023. The shares of this Markham-headquartered seniors living options provider have witnessed a sharp correction of more than 30% in the last year to currently trade at $10.66 per share, making it look undervalued to buy now for the long term. It currently has a market cap of $780.3 million and offers an attractive 8.8% annualized dividend yield.
Now, let me talk about some key fundamental factors that make it a great monthly dividend stock to hold for years to come.
Key fundamental factors
Sienna has nearly five decades of experience in providing a range of living options to seniors across Canada. Currently, the company has a network of 42 long-term communities, 38 retirement residences, and 13 managed residences, including in British Columbia, Ontario, and Saskatchewan provinces. At the end of 2022, it had total assets worth $1.7 billion.
Sienna’s annual revenue fell slightly in 2020, as COVID-19-related restrictions badly hurt the occupancy rate at its properties. Despite continued global pandemic-related challenges, its revenue-growth rate turned positive again in the following year with continued strong demand for its services. In 2022, Sienna posted 7.5% year-over-year positive revenue growth to $718.6 million. But temporary challenges like high inflation and labour shortages drove its adjusted earnings down by 67% from a year ago to $0.15 per share.
Nonetheless, the occupancy rate at its retirement residences has improved for six consecutive quarters. Better occupancy, along with increasing rental rates and its renewed focus on long-term-care redevelopment initiatives, should help Sienna Senior Living deliver strong financial growth in the coming years, making this Canadian monthly dividend stock worth considering on the dip.
Bottom line
As of March 2023, Sienna pays its investors $0.078 per share in monthly dividends. So, if you buy about 5,000 shares at the current market price with an investment of $53,300, you can expect to earn about $390 a month, or $4,680 a year, in passive income from its dividends. That said, you must try to diversify your portfolio to minimize your risks instead of investing such a large sum of money in a single monthly dividend stock.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Sienna Senior Living | $10.66 | 5,000 | $0.078 | $390 | Monthly |
| Prices as of Mar. 21, 2023 |
