Invest $7,000 in This Dividend Stock for Immense Passive Income

There’s one sector that’s due to continue seeing a massive rise, and that’s healthcare. And this dividend stock is a top choice.

| More on:
telehealth stocks

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When it comes to dividend stocks, monthly income can be a top way to earn income even if the market is volatile. If you’re looking for a reliable dividend stock to add to your portfolio for long-term monthly passive income, Extendicare (TSX:EXE) is one to seriously consider. With a solid history in the healthcare industry, particularly in senior care, Extendicare offers both stability and consistent payouts. This reliability makes it a standout choice for passive income investors.

Created with Highcharts 11.4.3Extendicare PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Into earnings

The dividend stock’s recent earnings report for Q2 2024 highlighted robust performance, with revenue growing by 13.3% year over year. Net income also skyrocketed by an impressive 1,227%, thus signalling management’s success in navigating a post-pandemic recovery while maintaining strong cost control measures. Return on equity sits at a stunning 60%, indicating the company’s ability to turn investments into profits efficiently. This is a great sign for long-term investors.

However, the stock is down from its 52-week highs, with a 200-day moving average of $7.69. While this may seem concerning at first, it’s important to recognize that much of the decline can be attributed to broader market volatility, especially in healthcare sectors impacted by inflation and rising labour costs. Management has been proactive, focusing on increasing efficiency and exploring new growth areas like home health care, which should mitigate the risks over time.

One of Extendicare’s key strategies has been a shift toward expanding its home healthcare services. This is becoming increasingly popular as more seniors prefer aging at home. The focus not only taps into a growing market but also positions the company for continued revenue growth. This pivot also reduces the company’s reliance on traditional long-term care facilities, which have seen more challenges post-pandemic.

What you get now

Looking ahead, the dividend stock is expected to maintain its consistent dividend payouts. All thanks to a stable revenue stream and a commitment to returning value to shareholders. Management continues to invest in technology and expand services. So there’s potential for revenue to keep growing at a healthy pace. These moves suggest that Extendicare is building a resilient business model that can weather short-term headwinds.

Meanwhile, the dividend stock has been delivering monthly dividends at an annual rate of $0.48, yielding around 5.14%. This makes it appealing for those looking to maximize cash flow without waiting for quarterly payouts. The dividend stock’s long-standing business in senior living and home healthcare services has been bolstered by a growing demand for these services, especially with Canada’s aging population, setting up a promising future for the stock.

For investors seeking a steady income stream with a focus on the long term, Extendicare offers the best of both worlds. Its current dividend yield is attractive, and its proactive approach to growth and efficiency puts it in a strong position for the future. While it’s not without risks, such as labour cost pressures, the dividend stock’s strong financials and management strategy provide confidence.

Bottom line

All considered, Extendicare is a top pick for those seeking monthly passive income from dividends. Its attractive yield, coupled with sound management and a promising future, make it a standout option in the healthcare sector. In fact, $7,000 could create immense passive income from dividends and should shares climb back to all-time highs.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYINVESTMENT
EXE – now$9.35749$0.48$359.52monthly$7,000
EXE – highs$10.35749$0.48$359.52monthly$7,752.15

Now you have $359.52 in dividends and $752.15 in returns for $1,111.67 in passive income! With the company’s commitment to growth and efficiency, this stock could offer both reliable income and potential capital appreciation for long-term investors.

Should you invest $1,000 in First National Financial Corporation right now?

Before you buy stock in First National Financial Corporation, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and First National Financial Corporation wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Amy Legate-Wolfe 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.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

I’d Put $15,000 in These 3 Dividend-Growth Champions for Increasing Income Potential

Want to offset some volatility? Here are three defensive dividend-growth champions that can generate a juicy yield right now.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $7,000

Discover how the Tax-Free Savings Account can be your golden goose for generating cash without losing your investment.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Invest $10,000 in Canadian Value Stocks for Monthly Dividend Income

A $10,000-diversified portfolio of value stocks focusing on dividend safety, yield, growth, and payment schedules can provide a reliable source…

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $5,000? 5 Income Stocks to Buy and Hold Forever

These income stocks have a solid dividend-payout history that can help you earn stress-free passive income.

Read more »

grow money, wealth build
Dividend Stocks

Why I’d Invest $10,000 in This Undervalued Dividend-Growth Stock for Decades of Income

This undervalued dividend stock offers a high yield of over 8% and can help you earn more than $200 in…

Read more »