Buy 1,283 Shares of This Top Dividend Stock for $100/Month in Passive Income

Investing in quality monthly dividend stocks such as Sienna Senior Living is a low-cost strategy to earn passive income.

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There are several monthly dividend stocks trading on the TSX index but just a handful of them are quality long-term investment choices. As dividends are not guaranteed, it’s essential to avoid buying stocks solely on the basis of their dividend yield. Instead, you need to identify companies that generate steady cash flows across market cycles, allowing them to maintain dividends even during market downturns. Further, dividend stocks should have a sustainable payout ratio, allowing them to reinvest in organic growth and acquisitions as well as lower balance sheet debt, all of which should drive future cash flows and dividends higher.

Here is one such top TSX stock you can buy for monthly passive income.

An overview of Sienna Senior Living

Valued at $1.1 billion by market cap, Sienna Senior Living (TSX:SIA) owns, operates, and manages long-term-care communities, retirement residences, and managed residences. It ended the first quarter (Q1) of 2024 with 82 senior living residences and managed 12 residences for third parties. Its portfolio includes locations in provinces such as Ontario, British Columbia, Alberta, and Saskatchewan. The company offers services such as independent living, assisted living, and memory care, in addition to other long-term-care and specialized services.

Sienna Senior Living is an established provider of essential services, making it fairly recession-proof. It benefits from compelling demographics and growing demand. A diversified portfolio of government-funded long-term-care communities and private-pay retirement residences makes Sienna Senior one of the largest Canadian companies operating in this space.

Sienna Senior Living$14.521,283$0.078$100.074Monthly

Armed with a strong balance sheet and an investment-grade credit rating, Sienna Senior Living pays shareholders a monthly dividend of $0.078 per share, translating to a forward yield of 6.5%. For you to earn $100 in monthly dividends, you need to buy 1,283 shares of this real estate giant in June 2024. In the last decade, Sienna Senior Living stock has returned 109% to shareholders after adjusting for dividends. These returns are quite similar to the TSX index, but as past returns don’t matter much, let’s see if the dividend stock is a good buy right now.

Is Sienna Senior Living stock a good buy?

In Q1 of 2024, Sienna continued its trend of same-property net operating income (NOI) growth in its long-term-care and retirement segments. It was the company’s fifth consecutive quarter of same-property NOI growth in these two segments. Its same-property NOI increased by 75.9% year over year to $63.9 million. However, investors should note that Sienna Senior Living recognized $27 million in funding tied to pandemic-related reimbursement expenses.

It ended Q1 with the same-property occupancy of 88.1%, up 30 basis points from the year-ago period. Sienna Senior Living intensified its focus on homes with below-average occupancy rates, combined with strong leasing across the remainder of its portfolio.

Moreover, Sienna Senior reported adjusted funds from operations of $0.485 per share, up 94.8% year over year. Given a quarterly dividend of $0.234 per share, the company ended Q1 with a payout ratio of less than 50%.

Canadian investors should identify other such high-dividend stocks with a monthly payout to diversify their portfolio and lower investment risk.

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 Aditya Raghunath 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.

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