The board of Sienna Senior Living Inc. (TSE:SIA) has announced that it will pay a dividend on the 15th of March, with investors receiving CA$0.078 per share. This means the annual payment is 7.7% 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
A big dividend yield for a few years doesn't mean much if it can't be sustained. Sienna Senior Living isn't generating any profits, and it is paying out a very high proportion of the cash it is earning. This makes us feel that the dividend will be hard to maintain.
If the trend of the last few years continues, EPS will grow by 0.2% over the next 12 months. The company seems to be going down the right path, but it will probably take a little bit longer than a year to cross over into profitability. Unless this can be done in short order, the dividend might be difficult to sustain.
Sienna Senior Living Has A Solid Track Record
Even over a long history of paying dividends, the company's distributions have been remarkably stable. The dividend has gone from an annual total of CA$0.90 in 2014 to the most recent total annual payment of CA$0.936. Dividend payments have grown at less than 1% a year over this period. While the consistency in the dividend payments is impressive, we think the relatively slow rate of growth is less attractive.
Dividend Growth May Be Hard To Achieve
Investors could be attracted to the stock based on the quality of its payment history. Unfortunately, Sienna Senior Living's earnings per share has been essentially flat over the past five years, which means the dividend may not be increased each year. With no profits, we don't think Sienna Senior Living has much potential to grow the dividend in the future.
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. We can't deny that the payments have been very stable, but we are a little bit worried about the very high payout ratio. Overall, we don't think this company has the makings of a good income stock.
Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. For instance, we've picked out 2 warning signs for Sienna Senior Living that investors should take into consideration. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About TSX:SIA
Sienna Senior Living
Provides senior living and long-term care (LTC) services in Canada.
Acceptable track record second-rate dividend payer.
