Extendicare (TSX:EXE) is a Markham-based company that provides care and services for seniors in Canada. Today, I want to discuss why I’m looking to stack shares of this monthly dividend stock as we look ahead to August. Let’s jump in.
How has Extendicare performed over the past year?
Shares of Extendicare have increased 7.2% month over month as of close on Friday, July 21. The monthly dividend stock is now up 13% so far in 2023. Its shares are down marginally in the year-over-year period. Investors can see more of its recent performance with the interactive price chart below.
Here’s why investors should seek exposure to the long-term-care (LTC) space
Canada is faced with an aging population that will test the limits of the nation’s social safety net. The Canadian Institute for Health Information (CIHI) released a detailed report on senior population growth over a 20-year span back in 2017. It showed that the senior population grew from 2.0 million in 1977 to 3.5 million in 1997. The same report projects that the senior population will grow from 6.2 million in 2017 to 10.4 million in 2037. Moreover, the 75 and over age group will more than double over the same stretch.
Our country’s aging population should spur investors to get in on the LTC industry as well as other forms of retirement living. The market researcher Grand View Research recently valued the global LTC market at US$1.11 trillion in 2022. That same report projects that this market will deliver a compound annual growth rate (CAGR) of 6.6% from 2023 through to 2030.
Should investors be happy with this monthly dividend stock’s recent earnings?
Investors can expect to see Extendicare’s next batch of quarterly results on the morning of Friday, August 11. This company released its first-quarter (Q1) fiscal 2023 earnings on May 4. Extendicare reported revenue growth of 6.2% to $324 million. That growth was powered by LTC flow-through funding increases as well as higher LTC occupancy, home healthcare ADV growth of 6.1%. The company also benefited from billing rate increases.
EBITDA stands for earnings before interest, taxes, depreciation, and amortization. This company delivered adjusted EBITDA of $31.0 million in Q1 2023 — up $10.8 million compared to Q1 2022. Moreover, net operating income (NOI) increased $11.6 million year over year to $44.6 million. Earnings were also bolstered by improved funding, strong occupancy, and growth in home healthcare ADV and billings.
The province of Ontario announced a 2.4% blended funding hike for LTC providers on April 1, 2023. That should help deliver solid growth in Extendicare’s LTC segment in the quarters ahead.
Why I’m buying this monthly dividend stock today
Shares of this monthly dividend stock currently possess a price-to-earnings ratio of 9.5. That puts Extendicare in attractive value territory compared to its industry peers at the time of this writing. Better yet, Extendicare currently offers a monthly dividend of $0.04 per share. That represents a tasty 6.5% yield.
