1 Under-$12 Dividend Stock to Buy for Monthly Passive Income

Here’s an amazing, inexpensive Canadian monthly dividend stock to buy now for years of passive income.

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It’s a well-known fact that having a reliable source of monthly passive income can be of great help in tough economic times. While there are several different ways, investing in dividend stocks could be one of the easiest ways to achieve that goal. And the good news is that you don’t need a fortune to invest in dividend stocks to start earning monthly extra income, making dividend investing one of the most flexible ways to earn passive income.

To help you get there, I’ve identified a cheap Canadian monthly dividend stock you can buy now, which currently trades under-$12. Let’s take a closer look at what makes it a great stock to invest in for the long term.

A cheap Canadian dividend stock to buy now for passive income

Whether you are investing in monthly dividend stocks to earn passive-income or growth stocks with an expectation of earning outstanding returns on your investment in a short period, the basic rules of investing remain the same. Before picking a stock for your portfolio, you must ensure that it has a stable business model that can help the company consistently grow financially in the long run.

Speaking of a monthly dividend stock with a stable business model, I find Sienna Senior Living (TSX:SIA) quite attractive for long-term investors in 2023. Last year, the broader market selloff and growing expectations of a severe economic slowdown drove its share prices down by more than 27%. However, as the economy continues to grow at a better-than-expected pace in 2023, despite inflationary pressures, SIA stock has seen a 5.3% recovery to $11.48 per share this year.

With this, this monthly dividend stock currently has a market cap of $832.8 million and a really attractive annualized dividend yield of 8.2%.

Key factors you should know before investing in it

If you don’t know it already, Sienna Senior Living is a Markham-headquartered company that focuses on providing a variety of living options to seniors across Canada, including independent living, assisted living, memory care, and long-term care.

At the end of the first quarter of 2023, Sienna Senior Living had a large portfolio of 82 senior living residences, primarily in British Columbia, Ontario, and Saskatchewan provinces. Besides operating these properties, it also operated 11 residences for third parties. With this, the company’s total assets were valued at around $1.7 billion.

After the COVID-19 pandemic-related restrictions badly affected its operations for nearly two years, the occupancy rate at its retirement and long-term-care communities has seen a gradual growth in the last few quarters. This was one of the key reasons that drove its same-property net operating income up by nearly 10% year over year to $24.7 million in the March 20203 quarter. Besides occupancy gains, a recent increase in the average annual rate for its services and continued careful cost management also added optimism.

Moreover, Canada’s demographics are also in its favour, as the country’s population in the 85-plus age group is expected to triple in the next 25 years. This should help the demand for its services inch up in the long term to make its financials grow faster, which should help this monthly dividend stock rally.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Jitendra Parashar has no position in any of the stocks mentioned.

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