SIA:CC - Should You Buy Sienna Stock for its 8.3% Dividend Yield?

2023-12-29 21:00:00 ET

There are still many dividend stocks out there offering large passive income through dividends. And while that’s great and all, there isn’t much reason to pick up these stocks if shares aren’t also going to give you passive income.

That’s why today we’re going to look at Sienna Senior Living ( TSX:SIA ). Sienna stock offers a huge dividend yield of 8.3% as of writing. But is it worth it? Let’s take a look.

About Sienna

First off, let’s look at what Sienna stock does in the first place. Sienna stock is a senior living provider, as the name suggests. The company provides both senior homes as well as long-term-care facilities and services. This includes independent supportive and assisted living, memory care, and long-term-care services.

Moreover, Sienna stock is one of the largest owners of senior housing and the largest licensed long-term care operator in Ontario. This is important, given that Ontario remains the most populated of Canadian provinces and territories. A large portion of this population includes Baby Boomers, who will soon be headed towards these facilities.

The company currently operates 35 long-term-care residences in Ontario and eight senior living residences in British Columbia. It also holds a retirement segment, with five in B.C. and 22 in Ontario. Yet with all these facilities, has it proven to be a success?

Looking at earnings

Earnings are important to consider if you’re looking at long-term success for a company such as Sienna stock. The company needs to show that it’s trying to expand, while still holding a full occupancy rate. And that can be quite difficult in the industry of senior living.

Since the pandemic, Sienna stock has been pushing “relentlessly” to put forward initiatives that would place Sienna stock at the top of senior living homes. During the latest earnings report, Sienna stock reported net operating income (NOI) of $37.5 million, up 7% compared to the same period in 2022. Its long-term-care facilities held a 98.4% occupancy, while retirement homes retained 86.9%.

Meanwhile, it’s now expanding through B.C. and into Alberta, with its first retirement residence set to be built in the province. This is all while seeing revenue climb 5.6% year over year, with adjusted funds from operations (AFFO) per share increasing 18.5% as well.

The fundamentals

Finally, if we’re going to consider this dividend stock, let’s look at the fundamentals. Shares of Sienna stock are up just about 5% in the last year. It fell to lows in October, but since then, it has been up about 13% in the last two months.

The stock trades at 1.08 times sales as well as 2.1 times book value. Meanwhile, its dividend yield remains at a very high 8.32% as of writing. And that dividend comes out each and every month . So, if you’re considering an investment, here is what you could see happen with a $5,000 purchase.

So, now you have $417.36 in dividend income, as $621.04 in returns! That would create total passive income of $1,038.40! Therefore, while Sienna stock continues to recover, it could certainly be a strong dividend stock to purchase today.

The post Should You Buy Sienna Stock for its 8.3% Dividend Yield? 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 .

2023