Dividend investing is one of the most popular ways of earning extra cash every month in Canada. As the TSX Composite Index has several well-established legacy companies with reliable business models, monthly passive income seekers can expect to receive cash from such companies’ quality dividends. In addition, dividend stocks can help you keep your risks low as they usually tend to be less volatile compared to growth stocks, even in difficult economic conditions.
In this article, I’ll highlight a top Canadian dividend stock you can buy on the Toronto Stock Exchange today to create a stream of monthly passive income.
A top dividend stock to buy in Canada today
When you’re picking a dividend stock to buy and hold for over a decade, you need to be extra cautious and carefully analyze its financial growth trends and fundamental outlook before arriving at your final investment decision. This way, you can avoid weak stocks that could potentially increase your risk profile in the future.
Keeping that guideline in mind, Sienna Senior Living (TSX:SIA) could be a trustworthy monthly dividend stock to consider buying right now. If you don’t know it already, it’s a Markham-based provider of a full range of seniors’ living options. The company currently owns and operates more than 80 properties across British Columbia, Ontario, and Saskatchewan, including retirement residences and long-term-care communities.
Sienna has a market cap of $857.6 million as its stock trades at $11.71 per share with 7.2% year-to-date gains as of September 6, 2023. At this market price, the stock offers a very attractive 8% annualized dividend yield and distributes its dividend payouts every month.
Now, let’s review its recent financial growth trends and find out why it could be a reliable monthly dividend stock to invest in today.
Why passive-income seekers can trust this dividend stock
The first two things that make Sienna stock trustworthy for TSX investors seeking passive income are its experience of over a decade in the domain and its high-quality assets of nearly $1.7 billion.
The global pandemic-driven shutdowns and restrictions badly affected Sienna’s business in 2020, as the company posted an adjusted net loss of $0.37 per share that year compared to adjusted annual earnings of $0.11 per share in 2019. Nonetheless, the company posted a healthy financial recovery in the next two years. In 2022, it reported $0.15 per share in adjusted annual earnings, exceeding its pre-pandemic year 2019’s earnings levels.
Bay Street analysts project its annual earnings to be around $0.35 per share in 2024, which apparently reflects their confidence in Sienna’s ability to grow despite the tough economic environment.
Moreover, the population of Canadian citizens in the 85-plus age group is projected to triple in roughly 25 years. Given that, the demand for Sienna’s retirement residences and long-term-care living options is likely to improve significantly in the long run, which strengthens its long-term fundamental outlook.
Given these positive factors, you can expect Sienna to continue rewarding its investors with quality dividends each month while its share prices also have the potential to trend upward with improving financial growth.
