Up 115% But Still a Perfect Stock for Long-Term Income

Even after a run-up, Extendicare’s essential senior-care demand and reaffirmed dividend make it a steady, long-term income play.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published December 9, 4:00 pm EST

| More on: EXE

A dividend stock that’s up in share price might seem like the good news is over, but it can still be a strong long-term passive-income investment. Price declines don’t always reflect the health of the underlying business. Markets often overreact to short-term headlines, economic cycles, or interest rate moves, pushing solid companies lower. Even when their cash flow, payout stability, and long-term prospects remain intact. For income investors, that can be an opportunity. And right now, Extendicare (TSX:EXE) looks like one of those dividend stocks

EXE

Extendicare is one of Canada’s largest operators of long-term-care homes, retirement communities, and home-health services. The dividend stock’s business is simple but essential: providing daily care to seniors. This makes its revenue incredibly stable and resistant to economic cycles. Canada’s aging population is driving long-term demand for senior care at a pace that far exceeds current capacity, and Extendicare sits directly at the centre of that demographic wave.

Another key strength of Extendicare is its hybrid model. It generates revenue from both facility-based care and home health services. This diversification adds resilience to its cash flow and positions the dividend stock to capture growth from multiple angles of the senior-care spectrum. As governments increasingly shift toward funding home-based care to alleviate pressure on long-term-care facilities, Extendicare benefits from both sides.

Into earnings

Extendicare’s most recent earnings showed steady performance to support future growth. This was driven by higher occupancy and ongoing demand for long-term care and home-health services. Revenue continued to trend upward as provincial funding stabilized and the dividend stock saw improved cost recoveries compared to prior years, when staffing challenges and inflation heavily pressured margins. EXE reported stronger occupancy rates in both its long-term care homes and retirement communities and continued to push forward modernization projects designed to boost capacity and improve resident care.

Another important highlight from the latest earnings was the progress made in Extendicare’s redevelopment pipeline. Upgrading older facilities into modern, higher-capacity care homes not only improves quality for residents but also creates long-term financial upside. This comes through higher efficiencies and better funding models. Management continues to focus on strengthening its balance sheet, maintaining liquidity, and controlling expenses in an environment where staffing remains a challenge. Despite these headwinds, Extendicare reaffirmed the stability of its dividend and signalled confidence in its long-term cash-flow outlook.

Looking ahead

Extendicare is the type of dividend stock income investors shouldn’t ignore when it trades at a discount. The underlying business remains structurally strong even when the share price weakens. Seniors’ care is one of the most predictable industries in Canada, driven by demographics that are not only stable but accelerating. The number of Canadians aged over 75 is expected to surge over the next decade. Government funding models ensure that long-term care operators continue receiving steady inflows to support essential services.

EXE’s dividend remains well-covered by cash flow, and its high yield becomes even more attractive. A higher share price doesn’t change the fact that rooms remain full, waitlists remain long, and demand remains guaranteed for decades. This combination of declining price and steady fundamentals is exactly what creates opportunity for passive-income investors.

Bottom line

For investors seeking passive income, the goal is simple: find businesses that pay you steadily and predictably, regardless of market noise. Extendicare delivers that in spades. Its share price volatility reflects temporary sector sentiment, not an erosion of fundamental demand. And right now, here’s what $7,000 could bring in.