Sienna Senior Living (TSE:SIA) Has Announced A Dividend Of CA$0.078

The board of Sienna Senior Living Inc. (TSE:SIA) has announced that it will pay a dividend on the 15th of August, with investors receiving CA$0.078 per share. The dividend yield will be 7.9% based on this payment which is still above the industry average.

Check out our latest analysis for Sienna Senior Living

Sienna Senior Living's Distributions May Be Difficult To Sustain

While it is great to have a strong dividend yield, we should also consider whether the payment is sustainable. Sienna Senior Living is unprofitable despite paying a dividend, and it is paying out 262% of its free cash flow. This is quite a strong warning sign that the dividend may not be sustainable.

Recent, EPS has fallen by 6.5%, so this could continue over the next year. This means the company won't be turning a profit, which could place managers in the tough spot of having to choose between suspending the dividend or putting more pressure on the balance sheet.

Sienna Senior Living Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was CA$0.85 in 2013, and the most recent fiscal year payment was CA$0.936. Dividend payments have been growing, but very slowly over the period. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth Is Doubtful

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, things aren't all that rosy. Over the past five years, it looks as though Sienna Senior Living's EPS has declined at around 6.5% a year. If earnings continue declining, the company may have to make the difficult choice of reducing the dividend or even stopping it completely - the opposite of dividend growth.

Sienna Senior Living's Dividend Doesn't Look Sustainable

Overall, it's nice to see a consistent dividend payment, but we think that longer term, the current level of payment might be unsustainable. Although they have been consistent in the past, we think the payments are a little high to be sustained. We don't think Sienna Senior Living is a great stock to add to your portfolio if income is your focus.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. Taking the debate a bit further, we've identified 3 warning signs for Sienna Senior Living that investors need to be conscious of moving forward. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

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