According to the 2021 Census, over 861,000 Canadians were aged 85 and older, more than double the number from 2001. This age group grew by 12% between 2016 and 2021, but it still represented only 2.3% of the population. However, projections show that by 2046, the number of people aged 85 and older could triple to nearly 2.5 million in Canada.
While the aging population might present some challenges, especially in health care and housing, it’s also likely to create more demand for many services such as long-term care, assisted living, and retirement residences. Companies that offer such services have the potential to grow significantly in the coming decades. That’s why it could be the right time for long-term investors to consider adding shares of such companies to their portfolio now and holding them for at least the next 10 years.
In this article, I’ll highlight a top Canadian stock that not only benefits from the aging population but also has the potential to provide robust returns to investors due to its position in senior living services. Let’s begin.
A top Canadian stock that benefits from an aging population
One fundamentally strong company that stands to benefit significantly from these demographic trends is Sienna Senior Living (TSX:SIA). If you don’t know it already, it is a Markham-headquartered company that provides a variety of senior care services in Canada, including independent living, assisted living, memory care, and long-term care. The company focuses on delivering high-quality care and enriching the lives of seniors through compassionate support and innovative programs.
This top stock currently has a market cap of $1.3 billion as its stock trades at $16 per share after rallying by 40% so far in 2024. With this, SIA stock has outperformed the broader market by a wide margin as the TSX Composite has risen by around 10% year to date. At the current market price, Sienna also offers an attractive 5.9% annualized dividend yield. More importantly, it distributes its dividend payouts every month, which makes its stock even more appealing for long-term investors who are seeking stable and regular passive income.
My top reasons to buy this stock now
In the quarter ended in June 2024, Sienna’s adjusted revenue jumped by 10.7% YoY (year over year) to $219.5 million with the help of higher rental rates and occupancy improvements in its retirement segment. Similarly, the performance of its long-term-care segment remained stable as government funding helped it counter inflationary pressures.
During the quarter, the company’s same-property occupancy improved by 180 basis points YoY to 88.6%. Besides growing demand for its services and its gradually expanding footprint across Canada, Sienna’s consistent focus on community outreach and sales initiatives seems to be working effectively, which should continue to drive its occupancy rates higher.
In addition, the recent three consecutive declines in the Bank of Canada’s policy interest rates are likely to reduce borrowing costs for companies like Sienna Senior Living. Lower borrowing costs could play an important role in Sienna’s growth prospects in the coming years as it plans to upgrade its facilities and undertake more development and expansion projects. All these factors make it an amazing Canadian stock to bet on for the long term.
