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Dividend Investors Can Earn $500 Every Month or More With the Right Stock Offering a 6% Yield

Family relationship with bond and care
Image source: Getty Images

Written by Christopher Liew, CFA at The Motley Fool Canada

Dividend payments generally indicate a company’s good financial health or standing. The payout frequency is typically quarterly, but some investors, including retirees, prefer regular monthly payouts instead of a lump sum every three months. Monthly income seekers are fortunate that the TSX is home to several monthly dividend payers.

Extendicare (TSX:EXE) and Sienna Senior Living (TSX:SIA), both senior housing companies and long-term care (LTC) providers, top the list. Besides the monthly payout, the more than 6% dividend offer is the added enticement. A 6% dividend yield means a $100,000 investment can transform into $500 monthly.

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However, it doesn’t mean investing all your money in a few individual stocks. Extendicare or Sienna Senior Living can complement other monthly dividend payers like Canadian real estate investment trusts (REITs) in an investment portfolio. You can spread the risks, if not lessen them, with diversification.

Robust development program

Extendicare is up nearly 10% year to date, and at $7.83 per share, you can partake in the 6.13% dividend yield. This $652.9 million provider of LTC and home health care services has been around since 1968. The positive financial results to start 2024 are a compelling reason to take a position in the stock.

In Q1 2024, both revenue and net earnings increased 13.1% year over year to $367.1 million and $13.1 million, respectively. Notably, net operating income (NOI) increased 0.4% to $44.7 million versus Q1 2023, while the LTC average occupancy was 97.5% at the quarter’s end.

“We continued to see the benefits of our strategy in action in the first quarter, with double-digit growth across our home health care and managed services segments,” said Dr. Michael Guerriere, President and CEO of Extendicare. The Government of Ontario’s increased budget for LTC is a big boost and should restore the sector’s financial stability. It would also support Extendicare’s redevelopment program.

Extendicare has 15 redevelopment projects in Ontario, and construction of four new projects will commence in 2024. Prospective investors would be happy to know that the stock has not missed paying monthly dividends since January 2013.

Stability and growth

Sienna Senior Living has outperformed thus far in 2024. At $14.94 per share, current investors are ahead 33.2% year to date, while partaking in the generous 6.27% dividend yield. This $1.1 billion senior housing company is an icon in Canada’s Medical Care Facilities industry.

Its President and CEO, Nitin Jain, said, “Building on last year’s achievements, we are off to a great start in 2024, with our first quarter results highlighting that we have transitioned into a period defined by stability and growth.” In Q1 2024, revenue and NOI climbed 19.9% and 74.9% year over year to $239.4 million and $63.5 million, respectively.

Sienna’s net income for the quarter reached $19.7 million compared to the $340,000 net loss in Q1 2023. As of March 31, 2024, retirement home and LTC average occupancy were 86.6% and 97.5%, respectively.

The annual funding increases by the governments of Ontario and British Columbia for the sector were significant factors in NOI growth. Furthermore, management sees significant growth potential in its business over the next several years.

Attractive features

Extendicare or Sienna Senior Living are valuable additions to any stock portfolio. The generous dividend yields and monthly payouts are attractive features for income-focused investors.

The post Dividend Investors Can Earn $500 Every Month or More With the Right Stock Offering a 6% Yield appeared first on The Motley Fool Canada.

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Fool contributor Christopher Liew 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