Image source: Getty Images
If you’re looking for ways to earn monthly passive income, you must try dividend investing. This is because dividend investing gives you the flexibility to choose the amount you want to invest in monthly dividend stocks, which is directly proportional to the amount of passive income you can expect each month.
Although the Canadian stock market has remained turbulent lately, some fundamentally strong monthly-paying dividend stocks are outperforming the broader market, making them attractive to buy. In this article, I’ll highlight one such Canadian monthly dividend stock I find best to hold for decades.
A Canadian monthly dividend stock to hold forever
Whether you are new to the stock market or an experienced investor, you should never ignore the underlying fundamentals of a company, as they may tell you a lot about how its stock might perform in the future. On the one hand, companies with weak fundamentals might face difficulty when facing an economic downturn, which can force them to cut or even discontinue their dividend payouts. On the other hand, companies with a strong financial base and a healthy fundamental outlook can continue rewarding their investors with increasing dividends even in difficult market environments.
Keeping that guideline in mind, Sienna Senior Living (TSX:SIA) could be the monthly dividend stock you may want to add to your portfolio now to generate extra cash in Canada. This Markham-headquartered company mainly focuses on operating retirement and long-term-care residences for seniors across Canada, with most of its properties located in British Columbia, Ontario, and Saskatchewan provinces.
Sienna currently has a market cap of $763.8 million, as its stock trades at $10.44 per share after witnessing a 1% value erosion in the last six months. By comparison, the TSX Composite benchmark has seen a much steeper 6.1% decline during the same period. Despite macroeconomic woes, Sienna’s continued post-pandemic recovery could be the primary reason why its share prices have outperformed the broader market lately.
At the time of writing, this Canadian monthly dividend stock offers a very impressive 9.1% annualized dividend yield and distributes its dividend payouts every month.
Now, let’s quickly review its financial growth trends and find out what makes its fundamental outlook look bright.
Its strong fundamentals can support dividend growth
Although COVID-related restrictions badly affected Sienna’s operations and financial growth in 2020, it has been on a path to gradual financial recovery since the second half of 2021. In 2022, the company’s revenue growth rate improved to 7.5% YoY (year over year) compared to less than 1% in the previous year.
In the second quarter of 2023, the company’s same property net operating income increased by 9.3% YoY with the help of a strong 13.9% gain in its long-term-care segment. For the quarter, the average occupancy for its long-term-care segment inched up to 98%, while for the retirement segment, average occupancy rose to 86.9%, reflecting consistent occupancy improvements, despite a tough consumer spending environment.
Moreover, you can expect the demand for Sienna’s services to increase further in the long run as the elderly population in the 85-plus age group is expected to triple in around the next 25 years, which has the potential to accelerate its financial and dividend growth as well.