Beginning investors seeking consistent income often look to dividend stocks that offer high yields. While high yields might sound appealing, they can also be risky and unreliable, especially if the company is unable to sustain its earnings and cash flow.
That’s why savvy income investors prefer dividend stocks that have a track record of increasing earnings over time and strong balance sheets to sustain their dividend payouts. One such Canadian dividend stock that offers both attractive yield and monthly payments is Sienna Senior Living (TSX: SIA).
A reliable Canadian monthly dividend stock
Sienna Senior Living has been a consistent provider of monthly dividends since its public listing in March 2010.
It hasn’t achieved “Dividend King” status, a label usually used for companies increasing dividends for over 50 years. However, it still stands out as a reliable Canadian monthly dividend stock for those looking to earn stable dividend income, making this TSX stock a “king” in its own unique way. Now, let me quickly highlight key fundamental factors that make Sienna Senior Living a really attractive dividend stock for income investors.
Sienna Senior Living stock
This Markham-headquartered company primarily focuses on providing seniors’ living and care services across Canada. Sienna currently operates 92 high-quality assets, including 42 long-term-care (LTC) communities, 39 retirement residences, and 11 managed residences. Last year, it generated most of its total revenues from the LTC segment.
It has a market cap of around $1 billion as its stock trades at $14.42 per share with nearly 26% year-to-date gains. At this market price, SIA stock offers roughly 6.5% annualized dividend yield and distributes its dividend payouts on a monthly basis.
Strong financials and solid fundamental outlook
In the first quarter of 2024, Sienna reported a solid 75.9% YoY (year-over-year) increase in same-property net operating income to $63.9 million, including $45.7 million in contributions from the LTC segment. The company’s total adjusted quarterly revenue rose by 19.9% YoY to $239.4 million with the help of annual rate increases and higher occupancy.
During the quarter, it also received government funding of $27 million, helping it offset pandemic-related and inflationary cost pressures from previous years. To add optimism, Sienna’s LTC segment average total occupancy improved to 97.5% at the end of March 2024 from 96.8% a year ago.
Capitalizing on the recent funding environment improvement, Sienna is advancing the redevelopment of its LTC home in Keswick, Ontario. The project, slated to begin construction in the fourth quarter, involves transforming the existing 60-bed facility into a state-of-the-art 160-bed home. This redevelopment project, along with the North Bay and Brantford projects, is likely to yield an estimated 8% development return, brightening Sienna’s long-term financial growth prospects.
Foolish takeaway
In addition to these fundamental factors, Canada’s demographics also support Sienna’s growth prospects, with the population in the 85-plus age group expected to grow at a fast pace. As the population ages, the demand for LTC and retirement living services will likely increase significantly. That’s why I expect Sienna to continue rewarding its investors with handsome returns through a combination of capital appreciation and monthly dividend payments in the long run.
