Sienna Senior Living (TSX: SIA) is a Markham-based company that provides senior living and long-term-care (LTC) services across Canada.
In this article, I want to discuss why this dividend stock is one of my favourite targets in late July 2023. Moreover, I want to explore the potential of its industry. Let’s jump in.
How has this dividend stock performed over the past year?
Shares of Sienna Senior Living have climbed 5.3% month over month as of close on Tuesday, July 25. The stock is now up 6.8% so far in 2023. However, its shares are still down 11% in the year-over-year period. Investors can see more of Sienna’s recent performance with the interactive price chart below.
Why Canadians should be eager for exposure to this burgeoning industry
Canada’s senior population is expected to grow above 10 million by 2037. Currently, Canada’s senior population of seven million makes up 19% of the total population. This growing demographic will make the demands on the country’s health care and social safety net heavier in the years and decades ahead. The public and private sectors will need to step up their efforts to meet these needs going forward.
ResearchAndMarkets recently valued the global LTC market at US$1.05 trillion in 2022. The same report projected that this market would deliver a compound annual growth rate (CAGR) of 6.5% from 2022 through to 2030. Ultimately, the report forecasts that this market will reach a valuation of US$1.7 trillion by the end of the projected period.
Should investors be happy with Sienna Senior’s recent earnings?
Investors can expect to see this company’s next batch of results before markets open on Friday, August 11. Sienna Senior Living released its first-quarter (Q1) fiscal 2023 earnings on May 11. The company posted same-property net operating income (NOI) of $34.7 million — up 9.9% compared to the previous year. Sienna posted an 11% jump in its retirement segment and a 9.1% increase in its LTC segment.
In Q1, Sienna reported average same-property occupancy growth of 300 basis points to 88%. Moreover, LTC occupancy rose to 96.8%.
Like its peers, Sienna has been the beneficiary of government funding that has sought to provide for its aging population. The company reported government funding increases for Resident Care, Programs & Food and Other Accommodations. Meanwhile, Sienna continued construction at a $140 million campus of care in Brantford, and an $80 million LTC redevelopment in North Bay.
On the financial front, the company delivered adjusted revenue growth of 14% to $199 million in Q1. Looking ahead, Sienna is projecting same-property occupancy for the full year of roughly 90%. Meanwhile, it is forecasting strong NOI growth in the quarters ahead.
Here’s why this dividend stock is one of my favourite picks in late July
Shares of this dividend stock are trading in favourable value territory compared to Sienna’s peers at the time of this writing. Moreover, it offers a monthly distribution of $0.078 per share. That represents a terrific 7.9% yield.
