In the event you’re in search of a steady dividend payer with predictable revenue, Sienna Senior Dwelling (TSX:SIA) 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 presents the form of money move buyers love. However there’s extra to this story than the payout.
Into earnings
Let’s discuss 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 web working revenue (NOI) rose 8.5%, with the retirement section posting a formidable 16.7% year-over-year improve. For buyers apprehensive 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 thus far this yr, together with 4 persevering with care properties 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 assist additional growth if wanted.
As for its month-to-month payout, the dividend seems to be sustainable. Sienna’s AFFO per share got here in at $0.266 for Q1, with a payout ratio of 91%. That’s down from practically 95% a yr in the past. It’s tight, however on target. Given the rise in NOI and regular occupancy beneficial properties, 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 personal lodging income. Even in long-term care, which is a slower-moving section, 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 improvement and acquisition exercise. Curiosity prices stay manageable with a weighted common value of debt at 3.8%. With improvement tasks now underway in North Bay, Brantford, and Keswick, price over $300 million mixed, Sienna is constructing for long-term progress whereas aiming for improvement yields of 8% or extra.
The largest danger? The tempo of stabilization. Whereas a lot of Sienna’s properties are practically 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 should be affected person as these contributions roll in throughout 2025 and past.
Backside line
So is that this a flashy progress inventory? No. However it doesn’t fake to be. Sienna is providing regular revenue, backed by important companies in a sector with rising demand. Canada’s senior inhabitants is increasing quickly and new provide is proscribed. That provides firms like Sienna pricing energy over time, particularly in markets like Ottawa the place they have already got a robust footprint. And proper now, buyers may usher in about $1,044 in annual dividends from a $20,000 funding on this prime dividend inventory. That’s $87 every month!
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| SIA | $18.00 | 1,111 | $0.94 | $1,044.34 | Month-to-month | $19,998.00 |
For buyers trying to find month-to-month passive revenue with a dividend you don’t have to fret about reducing each time the wind modifications, Sienna would possibly simply do the trick. With a strong dividend, room for natural and acquisition-driven progress, and enhancing monetary metrics, it might be a cushty slot in any income-focused portfolio.
