Should You Buy Sienna Stock for its 8.3% Yield?

Sienna (TSX:SIA) stock is a strong dividend stock that’s only getting stronger, as it continues to bring down costs and expand organically.

| More on:
consider the options

Image source: Getty Images

Dividend yields aren’t everything. But it can be especially enticing when a dividend yield gets incredibly high, and you find a dividend stock that’s due to recover. Today, we’re going to see whether Sienna Senior Living (TSX:SIA) is one of these dividend stocks. So, let’s get right into it.

Earnings improvements

During the last few earnings reports, Sienna stock continues to trade at a “hold” rating by analysts. The company has been pushing initiatives “relentlessly” to put the company in the top spot among senior home living facilities. So, has it been working?

During the last earnings report, Sienna stock continued to bring down agency costs, stabilize occupancy, and increase its funds from operations (FFO) by nearly 12%. Same-property net operating income (NOI) rose 7% year over year during the third quarter, with the average occupancy increasing to 98.4%.

Adjusted revenue was up 5.6%, helped along by higher occupancy as well. Total NOI was up 9%, with adjusted FFO up 18.5%. So, overall, the increased occupancy and lower costs have all been helping Sienna stock.

Analysts weigh in

Analysts liked the positive news coming from Sienna stock, but it still wasn’t enough to mark it as an outperformer these days. The company’s results merely reflected continued stabilization, which, of course, is certainly positive.

The operating environment continues to improve across the board in terms of long-term care and retirement homes. Still, analysts were encouraged by the progress made in terms of cost reduction and bringing down staffing costs as well.

All in all, analysts believe there will be strong organic growth over the next year. Furthermore, the portfolio is in a great position to bring in long-term growth — especially as it continues to bring down costs and add to its development pipeline.

What buying now brings in

Let’s say you decide you want to bring Sienna stock into your portfolio for the long term. There’s reason enough to consider it today with that 8.29% dividend yield at the time of writing. But there’s even more from value.

Shares trade at just 1.08 times sales, with shares up just 2.3% year to date at the time of writing. That being said, those shares have gone up significantly since earnings. Shares increased 13% since bottoming out in October, providing a strong growth path. Now, if you were to invest $5,000 in Sienna stock today and see it rise to $52-week highs, here is what that could bring in.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYPORTFOLIO TOTAL
SIA – now$11.25444$0.94$417.36monthly$5,000
SIA – highs$12.66444$0.94$417.36monthly$5,621.04

Altogether, you could bring in returns of $621.04 and dividends of $417.36. That’s total passive income of $1,038.40! So, certainly consider Sienna stock with that dividend today.

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.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Construction work on a site
Dividend Stocks

2 Engineering & Construction Stocks You Can Buy and Hold for the Next Decade

Two prominent engineering and construction stocks are buying opportunities before the industry rebounds and grow in the next decade.

Read more »

Canadian Dollars
Dividend Stocks

For a Shot at $5,000 in Annual Passive Income, Buy 1,975 Shares of This TSX Stock

Are you looking to earn steady income? While there is no certainty in stocks, this stock can give you a…

Read more »

Target. Stand out from the crowd
Dividend Stocks

1 Magnificent Canadian Dividend Stock With 33% Upside to Buy and Hold Forever

Dividend stock Brookfield Business Partners LP (TSX:BBU.UN) is a powerhouse of growth, with even more to come in 2024.

Read more »

top TSX stocks to buy
Dividend Stocks

Passive Income: How Much to Invest to Get $6,000 Each Year

TSX energy stocks such as Enbridge can help you earn a passive stream of recurring income.

Read more »

protect, safe, trust
Dividend Stocks

Income Investors: 2 Safe Dividend Stocks to Own for Passive Income for Years

Long-term passive-income stocks should ideally offer enough dividend growth to counteract inflation while preserving or growing your capital.

Read more »

analyze data
Dividend Stocks

The 1 Best Growth Stock on the TSX Today

Fairfax Financial Holdings (TSX:FFH) stock took a hit, but it's still a great growth play for the long-term.

Read more »

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Got $10,000? That’s All the Start-Up Funds You Need to Get Money for Doing Nothing 

Have you been delaying long-term investments for later? Investing money while you are working can help money work for you.

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

Buy 32 Shares in This Glorious Dividend Stock and Create $1,074.88 in Passive Income

This dividend stock is also a growth stock you're going to want on your side over the next year and…

Read more »