This company enjoyed a major benefit during COVID-19 uncertainty as more than 90% of its long-term care business was government funded. The recent sale of its retirement living operations will help the firm focus on its core segments.
Meanwhile, the stock trades at 15.5 times the company’s 2022 cash flow forecast.
EXTENDICARE INC. (Toronto symbol EXE; www.extendicare.com) owns and operates long-term care homes. It also provides services to senior living operators through its Extendicare Assist and SGP Purchasing Partner Network.
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Investors also tap the company’s ParaMed Home Health Care branches in six provinces. ParaMed provides nursing care and other forms of assistance to clients who remain in their own homes.
Extendicare continues to pay monthly distributions of $0.04 a share, for an annual rate of $0.48. That makes for a very high yield of 6.7%.
Dividend Stocks: Operations sale will help improve the company’s focus
In May 2022, Extendicare completed the sale of its retirement living operations—comprised of 1,048 retirement living suites across 11 retirement communities in Ontario and Saskatchewan—to Sienna-Sabra LP. That’s a partnership between Markham, Ontario-based Sienna Senior Living Inc. (Toronto symbol SIA) and California-based Sabra Healthcare REIT (Nasdaq symbol SBRA).
The purchase price was $307.5 million. Seven of the residences are in Ontario and four in Saskatchewan.
Extendicare made the sale to focus on expanding its long-term care and home health care segments. That’s where it feels it can best use its expertise and scale to drive future revenue and cash flow.
Meantime, while governments have deemed many services non-essential during the pandemic, there is no question that housing for seniors is vital. With more than 90% of its business now government funded, the company is well positioned to maintain the current high dividend.
Extendicare’s TSI Dividend Sustainability Rating is Average.
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To recommend EXE after what has happened in long-term care homes the last two years tells me TSI is out of touch.