Investors seldom pick healthcare stocks to boost their investment portfolios. If you’re looking ahead to 2025, a pair from the least favoured sector is worthy of consideration. Sienna Senior Living (TSX:SIA) has performed well this year, while Vitalhub (TSX:VHI) displays unstoppable upward momentum.
Given its generous dividend yield and monthly payouts, SIA is ideal for income-focused investors. On the other hand, VHI is a 2024 TSX30 winner (ranked 26th) and has delivered astronomical gains thus far this year. You can own both for passive income streams and capital gains.
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On the growth path
Sienna Senior Living is on the growth path following the remarkable recovery from the 2020 global pandemic. The $1.34 billion company is 52 years old and an established provider of seniors’ residences and long-term care (LTC) in the medical care facilities industry.
The growth potential is ever-present because of the needs-driven business, a fast-growing demographic in Canada, and the limited new supply of senior living accommodations. Management expects the internal portfolio optimization, redevelopments, and acquisitions to deliver incremental growth.
At $16.26 per share, current investors enjoy a 50.1%-plus year-to-date gain on top of the 5.8% dividend yield. A $15,625.86 investment (961 shares) remains intact and converts into $75 in monthly passive income.
In Q3 2024, adjusted revenue and net operating income (NOI) increased 12.5% and 14.8% respectively to $224.8 million and $43.4 million compared to Q3 2023. Besides the higher rental rates, the average total occupancy rates in senior residences and LTC rose to 88.2% and 98.4%, respectively.
Sienna expanded and added immediate scale in October by acquiring a senior housing portfolio in Western Canada. The Alberta Health Services (AHS) provided 100% of care services funding. Its President and CEO, Nitin Jain, said, “The third quarter has been one of considerable progress and success for our company.”
“Our recent initiatives to raise capital have been met with overwhelming investor demand. Backed by the sector tailwinds driven by an aging population, our accomplishments highlight our effective initiatives to improve our operating platforms, strengthen team engagement, and execute our growth strategies,” added Jain.
Thriving business
Like Sienna Senior Living, Vitalhub is a small-cap stock. The $613.5 million company provides software for health and human services providers. Its share price is relatively low at $11.96, but the gain is enormous (+186.5% year-to-date). Had you invested $6,997.20 (1,715 shares) at year-end 2023, your money would be $20,048.35 today.
Vitalhub’s primary mission is to help customers improve care delivery while optimizing financial and quality outcomes. The business thrives, evidenced by the Q3 2024 results. In the three months ending September 30, 2024, revenue and net income before taxes increased 25% and 30% respectively to $16.5 million and $2.4 million versus Q3 2023.
The annual recurring revenue (ARR) rose 25% to $53.4 million from a year ago. Its CEO, Dan Matlow, said VitalHub is on the path toward stable revenue and cash flow growth. He expects innovative technologies and digitization of healthcare systems to boost the company’s growth potential.
Strong buys
The healthcare sector is not top-of-mind with most investors. However, Sienna Senior Living and Vitalhub are compelling investments for their performance amid a challenging environment.
