Sienna Senior Living (TSE:SIA) Is Due To Pay A Dividend Of CA$0.078

By
Simply Wall St
Published
October 20, 2021
TSX:SIA
Source: Shutterstock

Sienna Senior Living Inc.'s (TSE:SIA) investors are due to receive a payment of CA$0.078 per share on 15th of November. This means the annual payment is 6.0% of the current stock price, which is above the average for the industry.

Check out our latest analysis for Sienna Senior Living

Sienna Senior Living Might Find It Hard To Continue The Dividend

If the payments aren't sustainable, a high yield for a few years won't matter that much. Sienna Senior Living is unprofitable despite paying a dividend, and it is paying out 145% of its free cash flow. This is quite a strong warning sign that the dividend may not be sustainable.

Looking forward, earnings per share could 44.4% over the next year if the trend of the last few years can't be broken. This will push the company into unprofitability, which means the managers will have to choose between suspending the dividend, or paying it out of cash reserves.

historic-dividend
TSX:SIA Historic Dividend October 21st 2021

Sienna Senior Living Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The first annual payment during the last 10 years was CA$0.85 in 2011, and the most recent fiscal year payment was CA$0.94. 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 Potential Is Shaky

The company's investors will be pleased to have been receiving dividend income for some time. Unfortunately things aren't as good as they seem. Sienna Senior Living's EPS has fallen by approximately 44% per year during the past five years. Dividend payments are likely to come under some pressure unless EPS can pull out of the nosedive it is in.

Sienna Senior Living's Dividend Doesn't Look Sustainable

In summary, while it's good to see that the dividend hasn't been cut, we are a bit cautious about Sienna Senior Living's payments, as there could be some issues with sustaining them into the future. 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.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. However, there are other things to consider for investors when analysing stock performance. 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. We have also put together a list of global stocks with a solid dividend.

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