There are many factors you need to consider when you are buying a dividend stock. Most of the factors are tied to the dividends themselves, including yield, payout ratio, and dividend history.
Other factors, like the financials of the business or market movements, can impact the dividend-oriented factors, so they are worth considering as well. A bull market phase might shrink the yield, while weak financials may directly impact dividend sustainability.
If we list these factors in the order of importance (both dividend-oriented or external), dividend frequency — i.e., when the company pays dividends (quarterly or monthly) — might be somewhere close to the bottom of the list.
However, it is worth considering if one of your goals for your dividend income is convenience. Monthly dividends can make personal financial management a tad easier, and for many investors, that might be a reason to consider dividend stocks like Sienna Senior Living (TSX: SIA).
A senior living stock
Sienna Senior Living is one of the most prominent names in Canadian senior/retirement living communities and facilities. It has a sizable portfolio of 42 long-term-care communities, 40 retirement residences, and 12 managed residences. At total capacity, Sienna can take care of well over 12,000 seniors/retirees.
The company operates in four Canadian provinces and has been around for over 52 years, making it a trusted part of many Canadian communities. The highest concentration of these facilities is in Ontario in target-market-rich areas.
The dividends
The company has been paying dividends for well over a decade now and has maintained its payouts in the last 10 years, including the market crash of 2020. It has managed to sustain its dividends despite the high payout ratio in the previous 10 years, which inspires confidence regarding its long-term dividend sustainability.
The stock is still trading at a 20% discount from its pre-pandemic peak and five-year high price point. One advantage of this discount is the beefed-up yield of around 6%. If you can park around $20,000 in the company and stash it in your Tax-Free Savings Account (TFSA), you can generate a monthly dividend income of about $100 at its current yield.
The yield would have been even more impressive if it hadn’t been for the bullish phase the stock is experiencing right now. It has risen over 32% since the beginning of this year and if it continues, you may benefit from some decent capital appreciation, along with enjoying its monthly benefits at a healthy yield.
Foolish takeaway
One reason the stock is a good buy right now is its bullish phase. If you buy now, you can lock in a high yield and experience capital growth, at least until the stock stabilizes. Waiting while the stock pushes upward may lower the yield and shorten the growth window you might gain access to by buying as early as possible, assuming you are confident about its bullish trend continuing.
