1 Dividend Stock Down 20% to Buy Right Now

Sienna stock (TSX:SIA) looks like a strong dividend stock that’s only getting stronger, but there is more growth available.

| More on:
Volatile market, stock volatility

Image source: Getty Images

When it comes to finding a great dividend stock, there are quite a few that continue to climb in 2024. And in fact, that includes Sienna Senior Living (TSX:SIA). Shares of the senior living stock continue to hover around 52-week highs. So, why would I consider it a deal of a dividend stock?

That’s because the company is still working back to highs not seen since 2021. Back then, the company passed $16.50 per share. That means of writing there is still 20% more room for growth.

With that in mind, let’s look at what Sienna stock has been doing these days to see why it’s a great buy right now.

First, recent climbs

The recent climb in share price of Sienna stock came from strong results during its fourth quarter and full-year report for 2023. The company saw strong results driven by a stable operating environment, as well as successful cost management and reductions in temporary agency staffing costs.

The company reported net operating income (NOI) that saw an increase of 16.5% year over year, with growth both in long-term care and retirement segments. Long-term care occupancy increased as well to 97.6%, with retirement occupancy rising to 88.2%. A reduction in staff meanwhile saved $8.9 million, with adjusted revenue up 13.3%.

For the year, adjusted revenue was up 10.8%, with NOI rising as well to 13%. Sienna held a strong financial position with high liquidity, and more growth initiatives on the way. What’s more, its outlook remained strong. The company cites the rise in senior needs to continue driving all its segments. And in fact, it stated it expects the average operating margin to improve by 50 to 100 basis points year over year.

Analysts love it

Several analysts of course weighed in on the results, and increased their potential price target for the dividend stock. The company’s stabilization was a key factor after years of instability among long-term care stocks. The potential NOI margin upside from its retirement homes was also a huge win.

Sienna stock is now considered a top candidate for a significant rating upgrade in the future, with the stock already rising steadily. All while still providing a discount from 2021 highs.

Analysts also love that it holds a crazy high dividend yield at 7.01% as of writing. The only issue? SIA stock does trade at 133.5 times earnings, so it certainly doesn’t look cheap right now. Even so, there are more signs of improvement. So let’s finish off with that.

Improving all the time

While year-over-year results are interesting, I like to look at quarter-over-quarter. This tends to demonstrate whether the company is seeing positive or negative momentum. And when it comes to Sienna stock, the momentum looks strong.

First off, let’s consider NOI. The company reported $37.1 million in NOI for the second quarter, which then rose to $37.5 million in the third quarter, and further to $37.7 million in the fourth quarter. Then there’s occupancy. Here is where there was a bit of a dip. Long-term care occupancy hit 98% in the second quarter, before climbing to 98.4% in the third, and falling to 97.6% in the fourth. Retirement properties hit 86.9% in the second and held in the third, before climbing to 88.2% by the fourth.

So overall, the company is making some cost-conscious moves that are holding it steady. In fact, it’s continuing to bring in even more NOI from these results. While slow, it’s steady. And that will mean a steady dividend as well. So if you’re looking for more stable growth harkening back to 2021 highs, this dividend stock could be for you. 

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

A worker gives a business presentation.
Dividend Stocks

TSX Communications in April 2024: The Best Stocks to Buy Right Now

Here are two of the best TSX communication stocks you can buy in April 2024 and hold for years to…

Read more »

Man considering whether to sell or buy
Dividend Stocks

Royal Bank of Canada Stock: Buy, Sell, or Hold?

Royal Bank of Canada (TSX:RY) has a high dividend yield. Should you buy it?

Read more »

Businessman looking at a red arrow crashing through the floor
Dividend Stocks

BCE’s Stock Price Has Fallen to its 10-Year Low of $44: How Low Can it Go?

BCE stock price has dipped 39% in two years and shows no signs of growth in the next few months.…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

Invest $10,000 in This Dividend Stock for $3,974.80 in Passive Income

This dividend stock gives you far more passive income than just from dividends alone, so consider it if you want…

Read more »

Payday ringed on a calendar
Dividend Stocks

This 6% Dividend Stock Pays Cash Every Month

Can a 6% dividend yield help you build a monthly retirement income? An investment made right can help you build…

Read more »

Payday ringed on a calendar
Dividend Stocks

Passive Income: How Much Should You Invest to Earn $1,000 Every Month?

These three monthly-paying dividend stocks can help you earn a monthly passive income of $1,000.

Read more »

Dividend Stocks

3 Dividend Stocks to Double Up on Right Now

Some of these dividend stocks will take longer to recover than others, but they'll certainly pay you to stick around.

Read more »

TFSA and coins
Dividend Stocks

TFSA Passive Income: How Much to Invest to Earn $250/Month

Want to earn $250/month of tax-free passive income? Here are four Canadian dividend stocks to look at buying in your…

Read more »