Beat the TSX With This Cash-Gushing Dividend Stock

A cash-gushing high-yield dividend stock continues to outperform and beat the TSX.

| More on:
Printing canadian dollar bills on a print machine

Source: Getty Images

The Bank of Canada initiated a rate reduction early this month because price pressures are easing. More cuts should lighten consumers’ financial burden. Meanwhile, dividend investing helped many people preserve purchasing power in the high-inflation environment.

Some dividend stocks even outperformed the TSX while forking dividend payments to shareholders. Many avoided Sienna Senior Living (TSX:SIA) during the global pandemic, but the business has recovered magnificently. Today, this healthcare stock is among the top-performing high-yield stocks.

At $14.46 per share, current investors enjoy a 29.63% year to date on top of the lucrative 6.5% dividend yield. You can beat the TSX with this cash-gusher stock that pays monthly dividends.

Stability and growth

Sienna Senior Living is an icon in Canada’s medical care facilities industry. The $1.04 billion senior housing company owns and operates seniors’ living residences and manages some for third parties. Its first-quarter (Q1) 2024 results were mighty impressive.

Nitin Jain, president and chief executive officer (CEO) of Sienna Senior Living, said, we have transitioned into a period defined by stability and growth.” He thanked the Ontario and British Columbia governments for prioritizing funding for seniors and their growing need for long-term care.

Jain added that financial assistance will stabilize and strengthen the essential sector. It has also closed the gap left by the pandemic and inflation over the past four years.

Financial highlights

In the three months ending March 31, 2024, total adjusted revenue and net operating income (NOI) increased 19.93% and 74.86% to $239.4 million and $63.5 million compared to Q1 2023. At the quarter’s end, the average total occupancy at the retirement residences and long-term-care (LTC) homes were 88.1% and 97.5%, respectively.

Sienna targets a stabilized average occupancy of 95% in its same-property portfolio in retirement operations. The company will focus on marketing and sales initiatives to achieve the goal and deliver high single-digit same-property NOI growth.

For LTC operations, Sienna expects to benefit from the significant funding improvements in old age, including costs for the rest of 2024. Management also sees significant growth potential on the horizon over the next several years that should result in NOI expansion.

Strong fundamentals

Sienna Senior Living maintains an optimistic outlook because long-term fundamentals in Canadian senior living are stronger than ever. Seniors or retirees are the fastest-growing demographics, and their needs are rising.

The company looks forward to more funding support for LTC redevelopment initiatives in Ontario. Providing additional capital will enable improvements to its homes and enhance residents’ experience, comfort and safety.

Dividend advantage

Sienna’s monthly dividends favour income-focused investors and people with long-term financial goals like retirement. Because of the monthly payout frequency, you can reinvest dividends 12 times a year, not four. Assuming you purchase 2,560 shares ($37,017.60), your money will generate $200.50 in monthly passive income.

If you don’t collect cash dividends and instead reinvest them, the initial investment will compound to $70,784.50 in 10 years or $135,353 in 20 years. Sienna Senior Living boasts a solid dividend track record. Even with the financial constraint in 2020 due to the pandemic, the healthcare stock kept investors whole on the monthly dividends.

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 Christopher Liew 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

stock research, analyze data
Dividend Stocks

How Much to Invest to Get $500 in Dividends Every Month

TSX dividend stocks such as Enbridge, TD Bank, and Telus, can help you earn $500 in monthly dividend payments.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Dividend Powerhouses: Canadian Stocks to Fuel Your Portfolio

These two top Canadian dividend aristocrats are some of the top stocks on the TSX to buy now and hold…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

This Undervalued Dividend Stock is Worth Buying Right Now

Want an undervalued dividend stock with long-term potential and a juicy yield? Here's an option you may regret not buying…

Read more »

A worker gives a business presentation.
Dividend Stocks

1 Stock I’m Buying Hand Over Fist in July Despite the Market’s Pessimism

This top dividend stock is going through a rough patch, but don't let that count out all the growth we've…

Read more »

person on phone leaning against outside wall with scenic view at airbnb rental property
Dividend Stocks

2 TSX Stocks Poised to Have a Big Summer

Restaurant Brands International (TSX:QSR) stock and another darling that could be too cheap to ignore this summer.

Read more »

Dividend Stocks

Forget Fortis Stock: Buy This Magnificent Utilities Stock Instead

Looking for high dividends and returns? Then I'm sorry, but Fortis (TSX:FTS) stock probably isn't for you.

Read more »

Increasing yield
Dividend Stocks

2 High-Yield (But Slightly Risky) Stocks to Keep Your Eye on

Have these top TSX dividend stocks finally bottomed?

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks I’d Buy if They Fall a Bit

Any near-term decline in these two top Canadian dividend stocks will make them look even more attractive.

Read more »