Beat the TSX With This Cash-Gushing Dividend Stock

The Bank of Canada initiated a rate reduction early this month because price pressures are easing. More cuts should lighten consumers’ financial burden. Meanwhile, dividend investing helped many people preserve purchasing power in the high-inflation environment.

Some dividend stocks even outperformed the TSX while forking dividend payments to shareholders. Many avoided Sienna Senior Living (TSX:SIA) during the global pandemic, but the business has recovered magnificently. Today, this healthcare stock is among the top-performing high-yield stocks.

At $14.46 per share, current investors enjoy a 29.63% year to date on top of the lucrative 6.5% dividend yield. You can beat the TSX with this cash-gusher stock that pays monthly dividends.

Stability and growth

Sienna Senior Living is an icon in Canada’s medical care facilities industry. The $1.04 billion senior housing company owns and operates seniors’ living residences and manages some for third parties. Its first-quarter (Q1) 2024 results were mighty impressive.

Nitin Jain, president and chief executive officer (CEO) of Sienna Senior Living, said, we have transitioned into a period defined by stability and growth.” He thanked the Ontario and British Columbia governments for prioritizing funding for seniors and their growing need for long-term care.

Jain added that financial assistance will stabilize and strengthen the essential sector. It has also closed the gap left by the pandemic and inflation over the past four years.

Financial highlights

In the three months ending March 31, 2024, total adjusted revenue and net operating income (NOI) increased 19.93% and 74.86% to $239.4 million and $63.5 million compared to Q1 2023. At the quarter’s end, the average total occupancy at the retirement residences and long-term-care (LTC) homes were 88.1% and 97.5%, respectively.

Sienna targets a stabilized average occupancy of 95% in its same-property portfolio in retirement operations. The company will focus on marketing and sales initiatives to achieve the goal and deliver high single-digit same-property NOI growth.

For LTC operations, Sienna expects to benefit from the significant funding improvements in old age, including costs for the rest of 2024. Management also sees significant growth potential on the horizon over the next several years that should result in NOI expansion.

Strong fundamentals

Sienna Senior Living maintains an optimistic outlook because long-term fundamentals in Canadian senior living are stronger than ever. Seniors or retirees are the fastest-growing demographics, and their needs are rising.

The company looks forward to more funding support for LTC redevelopment initiatives in Ontario. Providing additional capital will enable improvements to its homes and enhance residents’ experience, comfort and safety.

Dividend advantage

Sienna’s monthly dividends favour income-focused investors and people with long-term financial goals like retirement. Because of the monthly payout frequency, you can reinvest dividends 12 times a year, not four. Assuming you purchase 2,560 shares ($37,017.60), your money will generate $200.50 in monthly passive income.

If you don’t collect cash dividends and instead reinvest them, the initial investment will compound to $70,784.50 in 10 years or $135,353 in 20 years. Sienna Senior Living boasts a solid dividend track record. Even with the financial constraint in 2020 due to the pandemic, the healthcare stock kept investors whole on the monthly dividends.