Canadian small-cap companies are typically defined as those with a market capitalization between $300 million and $2 billion. These historically offer higher growth potential but also come with increased volatility.
Over the past 20 years, Canadian small-cap stocks have delivered an average annual return of approximately 8-10%. This is higher than the 6-8% average annual return for large-cap stocks. However, these returns come with greater risks. Small-cap stocks tend to experience more significant price swings and are more susceptible to economic downturns.
Despite the risks, small-cap companies can provide strong long-term growth opportunities, especially for investors willing to endure the higher volatility associated with this segment of the market and especially in the right area.
Senior living
The senior care sector in Canada is poised for significant growth due to the country’s aging population. With the baby boomer generation entering retirement age, the proportion of seniors in Canada is rapidly increasing. By 2030, it is projected that nearly one in four Canadians will be aged 65 or older. This demographic shift is creating a growing demand for a wide range of senior care services, from independent living facilities to assisted living, long-term care, and home healthcare. As the need for these services expands, the senior care sector is expected to experience substantial growth in both the private and public sectors.
Innovation and technological advancements are also driving growth in the senior care industry. Companies are increasingly adopting new technologies to improve the quality of care and efficiency of operations, such as telemedicine, remote monitoring, and digital health platforms. These technologies enable better management of chronic conditions, enhance communication between healthcare providers and patients, and allow seniors to age in place more comfortably.
Finally, the Canadian government’s commitment to supporting seniors further bolsters the growth potential of this sector. Federal and provincial governments are investing in infrastructure and policies aimed at enhancing senior care services. These include the expansion of long-term care facilities and the introduction of more comprehensive home care programs. Public-private partnerships are becoming more common, so as these incentives continue to increase, the senior care sector is likely to see sustained growth. This all makes it an attractive area for investment in the coming years.
Invest in Sienna Senior Living
Sienna Senior Living (TSX:SIA), a leading provider of senior living and long-term care in Canada. It’s well-positioned to benefit from the growing demand for senior care services driven by the aging population. With its extensive network of retirement and long-term care communities across the country, Sienna is poised to capitalize on the increasing need for high-quality senior care facilities.
The company continues to invest in expanding and upgrading its properties, focusing on personalized care and adopting innovative healthcare technologies. Government support for senior care infrastructure and services further enhances Sienna’s growth prospects, making it a strong contender in a sector set for significant expansion.
Its recent earnings report highlights its strong growth potential in the senior care sector. The company achieved a significant 18.5% year-over-year increase in same-property net operating income (NOI). This was driven by a 26.6% rise in its long-term-care (LTC) segment and a 9.5% increase in its retirement segment. This growth was supported by higher occupancy rates, government funding increases, and strategic initiatives to enhance its operations. The 10.7% increase in total adjusted revenue also shows Sienna’s ability to capitalize on the rising demand for senior care services in Canada, especially alongside improvements in occupancy and rental rates,
Sienna stock stands out as a valuable dividend stock due to its solid 5.94% forward annual dividend yield. This offers an attractive return for income-focused investors. Despite a high payout ratio of 240%, Sienna’s holds a steady operating cash flow and strategic position in the growing senior care sector. It now holds a market cap of $1.15 billion. Plus, the stock has seen a 31.20% increase over the past year. Altogether, Sienna offers both stability and potential for capital appreciation, making it a valuable addition to a dividend-focused portfolio.
