SIA:CC - 1 Dividend Stock Down 20% to Buy Right Now
2024-03-29 20:15:00 ET
When it comes to finding a great dividend stock, there are quite a few that continue to climb in 2024. And in fact, that includes Sienna Senior Living ( TSX:SIA ). Shares of the senior living stock continue to hover around 52-week highs. So, why would I consider it a deal of a dividend stock ?
That’s because the company is still working back to highs not seen since 2021. Back then, the company passed $16.50 per share. That means of writing there is still 20% more room for growth.
With that in mind, let’s look at what Sienna stock has been doing these days to see why it’s a great buy right now.
First, recent climbs
The recent climb in share price of Sienna stock came from strong results during its fourth quarter and full-year report for 2023. The company saw strong results driven by a stable operating environment, as well as successful cost management and reductions in temporary agency staffing costs.
The company reported net operating income (NOI) that saw an increase of 16.5% year over year, with growth both in long-term care and retirement segments. Long-term care occupancy increased as well to 97.6%, with retirement occupancy rising to 88.2%. A reduction in staff meanwhile saved $8.9 million, with adjusted revenue up 13.3%.
For the year, adjusted revenue was up 10.8%, with NOI rising as well to 13%. Sienna held a strong financial position with high liquidity, and more growth initiatives on the way. What’s more, its outlook remained strong. The company cites the rise in senior needs to continue driving all its segments. And in fact, it stated it expects the average operating margin to improve by 50 to 100 basis points year over year.
Analysts love it
Several analysts of course weighed in on the results, and increased their potential price target for the dividend stock. The company’s stabilization was a key factor after years of instability among long-term care stocks. The potential NOI margin upside from its retirement homes was also a huge win.
Sienna stock is now considered a top candidate for a significant rating upgrade in the future, with the stock already rising steadily. All while still providing a discount from 2021 highs.
Analysts also love that it holds a crazy high dividend yield at 7.01% as of writing. The only issue? SIA stock does trade at 133.5 times earnings, so it certainly doesn’t look cheap right now. Even so, there are more signs of improvement. So let’s finish off with that.
Improving all the time
While year-over-year results are interesting, I like to look at quarter-over-quarter. This tends to demonstrate whether the company is seeing positive or negative momentum. And when it comes to Sienna stock, the momentum looks strong.
First off, let’s consider NOI. The company reported $37.1 million in NOI for the second quarter, which then rose to $37.5 million in the third quarter, and further to $37.7 million in the fourth quarter. Then there’s occupancy. Here is where there was a bit of a dip. Long-term care occupancy hit 98% in the second quarter, before climbing to 98.4% in the third, and falling to 97.6% in the fourth. Retirement properties hit 86.9% in the second and held in the third, before climbing to 88.2% by the fourth.
So overall, the company is making some cost-conscious moves that are holding it steady. In fact, it’s continuing to bring in even more NOI from these results. While slow, it’s steady. And that will mean a steady dividend as well. So if you’re looking for more stable growth harkening back to 2021 highs, this dividend stock could be for you.
The post 1 Dividend Stock Down 20% to Buy Right Now appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .
2024