The S&P/TSX Composite Index dropped 116 points on Thursday, May 4. Some of the worst-performing sectors on the day included health care, battery metals, and industrials. Today, I want to target a top dividend stock that you can rely on to deliver hefty passive income going forward. Sienna Senior Living (TSX:SIA) is a Markham-based company that provides senior living and long-term-care (LTC) services in Canada.
In this article, I want to examine its recent earnings and explore how investors can hope to churn out $200/month in passive income with the stock in their portfolio. Investors who pursue this strategy should look to churn out income in a Tax-Free Savings Account (TFSA). That will allow you to churn out $200/month completely tax free. Let’s dive in!
How has this dividend stock performed over the past year?
Shares of this top dividend stock have increased marginally month over month as of close on May 4. However, the stock is still down 2.4% so far in 2023. Its shares have plunged 20% year over year. Investors who want to see more can play with the interactive price chart below.
Here’s why I’m bullish on Sienna going forward…
Canada’s aging population is set to support the growth of the same markets that Sienna offers exposure to. Back in 2021, JC Market Research valued the global market for retirement home service at US$5.32 billion. The report projected that this market would deliver a compound annual growth rate (CAGR) of 4.3% from 2022 through to 2031.
That is not all. Grand View Research recently estimated that the global LTC market was worth US$1.1 trillion in 2022. The report projects that this market will deliver a CAGR of 6.6% from 2023 through to 2030.
Investors can expect to see Sienna’s first batch of fiscal 2023 earnings later this month. In the fourth quarter (Q4) of fiscal 2022, Sienna delivered total adjusted revenue growth of 10% to $193 million. That was powered by occupancy growth and annual rental rate increases. Moreover, adjusted earnings before interest, taxes, depreciation, and amortization climbed 10% to $736 million for the full year. Meanwhile, average occupancy in its retirement and LTC segments rose to 87% and 88%, respectively.
Looking ahead, Sienna expects that its average same property occupancy will exceed 90% in its retirement segment. Moreover, the company projects that its net operating income will remain flat in fiscal 2023 compared to fiscal 2022.
Let’s explore how this dividend stock can help us churn out big passive income
This top dividend stock closed at $10.77 per share on Thursday, May 4. For our hypothetical, we can snatch up 2,570 shares of Sienna Senior Living for a purchase price of $27,678.90. This dividend stock currently offers a monthly distribution of $0.078 per share. That represents a monster 8.6% yield. This investment will allow us to generate monthly passive income of $200.46 going forward. That works out to annual passive income of $2,405.52.
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