Future retirees who plan to invest their savings and depend on dividend income for sustenance can’t afford to take high risks. Older folks must be risk-averse, especially if stocks are the main component of the investment portfolio. There’s less time to recover losses in case of a market downturn. Dividend safety and consistency, not high yield, should take precedence.
Savaria (TSX:SIS) in the industrial sector is among the top investment options for Canadian retirees. The sales pitch “enjoy better mobility for life” describes the nature of the business. Seniors can relate to mobility because it’s a common concern in the age group. This $1.29 billion company provides accessibility and mobility solutions, but is it a risky buy for retirees?
Business growth
Savaria was formed in 1989 and engaged in building wheelchair lifts. Marcel Bourassa believed the novelty product could serve the aging population’s needs while the business could grow for the long term. The small company he founded became a leading manufacturer and fixture in the accessibility industry.
Today, the product portfolio under the Accessibility business segment includes home elevators, commercial lifts, stairlifts, ceiling lifts and adapted vehicles. Its Span division of the Patient Care segment offers medical beds and therapeutic surfaces. Both segments have contributed to revenue growth and profitability in the last 10 years. Management forecasts revenue to reach $1 billion in 2025.
The manufacturing facilities in North America, Europe, and China, as well as direct sales offices, enable the company to reach global markets efficiently. Its network also helps Savaria develop new products to meet customers’ specific requirements. Moreover, growth opportunities are ever-present because market penetration levels are low compared to the expected needs of the growing aging population.
Financial performance
Savaria’s profit has significantly risen in recent years. In 2022, net income rose 206% year over year to $35.3 million and has averaged $36.6 million in 2022-2023. The 2024 full-year results aren’t out yet, but after three quarters, net earnings jumped 54% to $46.38 million compared to the same period in 2023.
In the third quarter (Q3) of 2024, the bottom line and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 19% and 21% to $13 million and $41.7 million versus Q3 2023. According to Bourassa, revenue remained stable despite persistent global economic pressures. He added that the focus in 2025 is sales growth, including acquisitions to enhance the current organic growth strategies.
Monthly dividends
Savaria is one of the select TSX stocks that pay monthly dividends. Retirees can incorporate the recurring payouts into their monthly budgets. At the stock price of $17.96, the dividend yield is 3.01%.
Dividend growth is on the horizon because of the strong financial performance. In October 2024, the board approved a 3.85% increase in the monthly dividend, the first hike since 2022.
Strong tailwinds
Savaria has cemented its position in the accessibility industry due to its comprehensive product offering and best-in-class manufacturing processes. The products help people maintain their personal mobility and the physically challenged to increase independence.
“Savaria One,” a multi-year company-wide initiative, will run through 2025. The program aims to maximize business potential and capitalize on opportunities across various areas. “We remain confident in our future with the aging population tailwinds favouring both our key business segments of “Accessibility and Patient Care,” said Bourassa.
