Investing in dividend stocks with a tasty yield allows you to begin a passive-income stream at a low cost. However, as these payouts are not guaranteed, it’s crucial to identify companies that have showcased an ability to maintain dividend payouts across market cycles.
One such high-dividend TSX stock is Sienna Senior Living (TSX: SIA). Valued at a market cap of $1.32 billion, Sienna Senior Living is part of a recession-resistant industry, providing senior living and long-term care services in Canada.
In the past decade, the TSX stock has doubled investor returns after accounting for dividend reinvestments. Today, it trades 20% below all-time highs and offers you a dividend yield of 5.7%. Let’s see why it makes sense to invest in this company right now.
Source: Getty Images
The bull case for investing in the TSX stock
Sienna Senior Living reported robust fourth-quarter (Q4) results and announced two strategic acquisitions worth $81 million as the senior living operator capitalizes on Canada’s growing elderly population and improving market fundamentals.
Sienna’s adjusted same-property net operating income (NOI) jumped 22.6% to $45.5 million in Q4, marking its eighth consecutive quarter of year-over-year growth. The retirement segment saw a 15.3% increase in NOI, while the long-term-care segment surged 29%, driven by stable occupancy and improved government funding.
“2024 has been a year of tremendous progress,” said Chief Executive Officer Nitin Jain. “With the rapid growth of Canada’s senior population driving unprecedented demand, we believe there is exceptional growth potential for Sienna for years to come.”
The company is expanding its footprint with two acquisitions in key Ontario markets: a $48 million retirement residence in Ottawa featuring 165 suites and a $32.6 million long-term-care facility with 192 beds in Mississauga. Both properties are being acquired at attractive capitalization rates of 6.25% and 6.75%, respectively, and at significant discounts to replacement costs.
“We are excited to further expand our operations with two high-quality acquisitions in Ontario, generating immediate synergies with our existing portfolio,” said David Hung, chief financial officer and executive vice president of investments at Sienna.
Operational metrics showed significant improvement, with same-property retirement occupancy increasing 300 basis points to 92.9% in Q4 and further improving to 93.1% in January 2025. Sienna Senior is targeting 95% occupancy within the next 12 months, supported by strong lead indicators and tour activity.
Its financial performance demonstrated solid momentum, with adjusted funds from operations (AFFO) per share increasing 25.1% to $0.304 in Q4 and the AFFO payout ratio improving to 77.1% from 96.2% year over year. Comparatively, total adjusted revenue grew 12.5% to $246.3 million, driven by occupancy increases, rental rate growth, and enhanced care services.
Sienna Senior maintained a strong financial position with liquidity of $435 million as of December 31, 2024, up from $307.3 million the previous year, primarily due to an equity raise in August 2024. Debt metrics also improved, with the debt-to-adjusted EBITDA ratio declining to 6.4 times from 8.4 times year over year.
What’s next for the TSX stock?
Sienna expects approximately 10% NOI growth in its retirement portfolio for 2025, driven by occupancy growth and rate increases. Moreover, it has identified five retirement residences for near-term repositioning to enhance its market fit and unlock growth potential.
Additionally, Sienna has three development projects under construction in North Bay, Brantford, and Keswick, representing over $300 million in investment. Two of these projects are expected to be operational in the second half of 2025.
Analysts tracking the TSX stock expect adjusted earnings to expand from $0.5 per share in 2024 to $0.57 per share in 2025. Priced at 28.5 times forward earnings, Sienna stock trades at a 15% discount to consensus price targets.
