For those who’re on the lookout for a steady dividend payer with predictable earnings, Sienna Senior Residing (Tsx: buckom) is perhaps your subsequent purchase. With a yield of roughly 5% at latest costs and dividends paid month-to-month, this healthcare actual property play gives the sort of money move traders love. However there’s extra to this story than the payout.
Into earnings
Let’s speak outcomes. Sienna reported its Q1 2025 financials in early Could, exhibiting a 12.1% bounce in adjusted income, as much as $241.8 million. The dividend inventory’s same-property internet working earnings (NOI) rose 8.5%, with the retirement phase posting a powerful 16.7% year-over-year enhance. For traders frightened about long-term care operators being caught in impartial, this could catch your consideration. Common occupancy within the retirement portfolio climbed to 92.5%, and the corporate expects to hit 95% occupancy by Q1 2026.
Sienna isn’t simply leaning on steady rents, it’s rising. It accomplished over $250 million in acquisitions up to now this yr, together with 4 persevering with care houses in Alberta and a number of retirement residences in Ottawa. These offers are anticipated to be instantly accretive to adjusted funds from operations (AFFO), and Sienna continues to scout new alternatives. Administration has even launched an “at-the-market” fairness program to help additional enlargement if wanted.
As for its month-to-month payout, the dividend seems sustainable. Sienna’s AFFO per share got here in at $0.266 for Q1, with a payout ratio of 91%. That’s down from almost 95% a yr in the past. It’s tight, however not off course. Given the rise in NOI and regular occupancy features, the dividend inventory seems to have sufficient cushion to keep up distributions whereas reinvesting for progress.
Concerns
It’s not all roses, in fact. Labour prices, meals, utilities, you identify it, are all rising. Working bills proceed to creep up. However Sienna is managing to offset a lot of that with increased rental charges and elevated non-public lodging income. Even in long-term care, which is a slower-moving phase, NOI rose 2.2% year-over-year, exhibiting some pricing energy and strong demand.
Debt ranges additionally look higher than final yr. The debt-to-gross e-book worth fell to 38.5%, down from 44.3%, largely due to fairness raises and rising asset values from latest growth and acquisition exercise. Curiosity prices stay manageable with a weighted common price of debt at 3.8%. With growth initiatives now underway in North Bay, Brantford, and Keswick, price over $300 million mixed, Sienna is constructing for long-term progress whereas aiming for growth yields of 8% or extra.
The most important threat? The tempo of stabilization. Whereas a lot of Sienna’s properties are almost full, some stay in ramp-up mode. The dividend inventory expects a few of its optimization initiatives, together with suite renovations and format modifications, to considerably increase NOI, however that takes time. Traders must be affected person as these contributions roll in throughout 2025 and past.
Backside line
So is that this a flashy progress inventory? No. But it surely doesn’t fake to be. Sienna is providing regular earnings, backed by important companies in a sector with rising demand. Canada’s senior inhabitants is increasing quickly and new provide is proscribed. That provides corporations like Sienna pricing energy over time, particularly in markets like Ottawa the place they have already got a powerful footprint. And proper now, traders may herald about $1,044 in annual dividends from a $20,000 funding on this high dividend inventory. That’s $87 every month!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| IS | $18.00 | 1,111 | $0.94 | $1,044.34 | Month-to-month | $19,998.00 |
For traders trying to find month-to-month passive earnings with a dividend you don’t have to fret about chopping each time the wind modifications, Sienna would possibly simply do the trick. With a strong dividend, room for natural and acquisition-driven progress, and bettering monetary metrics, it might be a snug slot in any income-focused portfolio.