Stock market volatility has made it almost impossible for stock market investors to consider investing in growth stocks. As inflation continues rising, central banks in the U.S. and Canada must continue introducing interest rate hikes. While the measure will eventually bring inflation under control, rising living and borrowing costs might continue negatively impacting the stock market.
The situation has already diminished returns for some of the top senior living stocks over the last 12 months, especially for Sienna Senior Living Inc. (TSX:SIA) and Chartwell Retirement Residences (TSX:CSH.UN) stocks.
As of this writing, the two stocks are down by 19.64% and 17.79%, respectively. That said, the 8.20% and 6.51% dividend yields of the two stocks, respectively, and long-term capital gains potential could make them excellent investments right now.
Sienna Senior Living
Sienna Senior Living is a $832.56 million Canadian publicly traded senior housing company headquartered in Markham. As one of the largest owners of senior housing properties, it is the largest licensed long-term-care (LTC) operator in Ontario.
Sienna Senior Living released its first-quarter earnings for fiscal 2023 on May 11. Its same-property net operating income (NOI) increased 9.9% year over year, and it reported a 96.8% occupancy in its LTC facilities.
As of this writing, the stock trades for $11.41 per share, boasting an 8.20% annualized dividend yield that it pays out each month. The growing demand for its services and its stable business model can make it an excellent buy-and-hold investment.
As the senior population in Canada is projected to triple in the next 25 years, you can expect to get significant returns on your investment in Sienna Senior Living stock.
Chartwell Retirement Residences
Chartwell Retirement Residences is a real estate investment trust (REIT) based in Mississauga, Ontario. The $2.26 billion market capitalization REIT is an unincorporated, open-ended trust engaged in owning, operating, and managing retirement and LTC communities across Canada. The company operates its retirement and LTC facilities separately, generating most of its revenue through its retirement segment.
As of this writing, the stock trades for $9.47 per share, boasting a 6.51% dividend annualized dividend yield that it pays out each month. In the March-ending quarter, Chartwell REIT reported a net loss that grew from $3.3 million in the first quarter of fiscal 2022 to $9.2 million.
However, its resident revenue increased by 5.2% year over year, and its weighted average occupancy rose by 1.4% to 78.5%. The trust’s goal is to become a more agile and scalable company in the future. Its unique portfolio and rising demand for its services in the coming years can make it an achievable goal.
Foolish takeaway
As inflation comes under control and interest rates stabilize then go down, senior living businesses have a better chance to manage operating costs. An improvement in macroeconomic factors can lead to a strong turnaround for Sienna and Chartwell stocks. Until that happens, investors can continue enjoying returns through high-yielding dividends.
With both stocks offering monthly payouts, Sienna stock and Chartwell stock can be excellent investments to generate a monthly passive income. If I had to choose among the two, I would pick Chartwell Retirement Residences stock due to its higher market capitalization and its national management platform, offering it significant, embedded, potential long-term value.
