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Monthly Dividend Stock in Focus: Savaria Corporation


Published on October 8th, 2024 by Felix Martinez

Companies that pay monthly dividends can help investors secure consistent cash flows, providing income on a more regular basis than those that pay quarterly or annual payments.

That said, just 77 companies currently offer monthly dividend payments, which can severely limit an investor’s options. You can see all 77 monthly dividend-paying names here.

You can download our full Excel spreadsheet of all monthly dividend stocks (along with metrics that matter, like dividend yield and payout ratio) by clicking on the link below:

 

One name that we have not yet reviewed is Savaria Corporation (SISXF), a Canadian-based company that operates in the accessibility industry. Shares currently yield more than 2.4%, which is roughly twice the average yield of the S&P 500 Index.

This article will evaluate the company, its business model, and its dividend to determine whether Savaria Corporation is a good candidate for purchase.

Business Overview

Savaria Corporation is a specialty industrial machinery company that provides accessibility solutions for the elderly and disabled. Though the company has a market capitalization of just $734 million, Savaria Corporation has a solid footprint around the world.

Source: 2024 Annual Report

The company has operations in Canada, the U.S., the U.K., Germany, China, and Italy, among others. In total, Savaria Corporation has more than 1 million square feet of production space, 30 direct sales offices, and 17 product and distribution centers.

Savaria Corporation is comprised of several business segments, including Accessibility, Patient Care, and Adapted Vehicles.

Accessibility manufactures products such as stairlifts for straight and curved staircases and wheelchair platform lifts. This segment contributes ~70% of revenue. Patient Care, which accounts for 21% of revenue, manufactures and markets therapeutic support surfaces for medical beds and other medical equipment. Adapted Vehicles produce vehicles for use by patients with mobility difficulties. This segment is the smallest within the company, making up less than 10% of total revenue. The company was founded in 1979 and is based in Laval, Quebec, Canada.

The company reported strong financial results for the second quarter of 2024, with revenue reaching $221.3 million, an increase of 11.6% compared to Q2 2023. This growth was driven primarily by 11.5% organic growth and a positive foreign exchange impact. The company’s Accessibility segment, which represents 78% of total revenue, saw a 15.1% growth, while the Patient Care segment had a slight decline in organic revenue. Gross profit rose by 23.6%, and operating income improved by 39.3%, reflecting higher margins and increased efficiency.

Savaria’s adjusted EBITDA for the quarter was $41.9 million, up 43.3% from the previous year, with an adjusted EBITDA margin of 19.0%. The Accessibility segment had a particularly strong performance, with an adjusted EBITDA margin of 20.9%. Patient Care maintained a healthy 17.0% margin. Additionally, Savaria reduced its net debt ratio to 1.88, signaling improved financial health and liquidity, with available funds of $226.6 million for future investments and growth.

Looking forward, Savaria aims to reach $1.0 billion in revenue and a 20% adjusted EBITDA margin by 2025. The company plans to achieve this through continued demand in its core segments, operational improvements, and strategic initiatives under its Savaria One program. The company is also focusing on potential acquisitions to offset recent divestitures and strengthen its position in the accessibility industry.

Growth Prospects

Savaria Corporation has a number of tailwinds that should help the company continue to grow. First, the company’s main markets are seeing elderly people make up a higher percentage of the total population. In the U.S. alone, those over 65 are projected to make up 21% of the population by 2030. People in this age group tend to require more assistance with mobility.

Next, the vast majority of older people wish to remain in their homes. According to AARP, nearly 80% of people over 50 want to stay in their homes as they age. More than two-thirds say that their properties have accessibility issues inside and outside of the home.

Source: 2024 Annual Report

Savaria Corporation estimates that the global long-term market will grow at 6% annually through 2030, which is solid if not spectacular, growth rate. By the end of this decade, the U.S. is forecasted to have 24 million people requiring long-term care.

Given that people are living longer, want to remain in their homes, and have accessibility challenges, a company like Savaria Corporation is poised to benefit from the demand for products.

The company offers a variety of products, from chair lifts to vehicles to beds, that can greatly improve the quality of life for customers. This can also help people remain in their homes as opposed to having to enter into an adult care center, which can be much more expensive than the products that Savaria Corporation markets. People wishing to remain in their home could very well be willing to purchase a product if it means that they can continue to live as they have.

Dividend Analysis

Savaria Corporation began paying an annual dividend before switching to a quarterly dividend in 2013. By late 2017, the company converted to its current monthly payment schedule.

Payments have fluctuated for U.S. investors due to currency exchange, but the size of the dividend has gradually increased over the years. U.S. investors received $0.39 in annual dividends last year and are expected to receive $0.39 in 2024. As you can see, dividend growth is none or typically been very low. We do not anticipate that this will change.

The reason that the dividend hasn’t increased materially in the past and is not forecasted to so in the near future is due to the high payout ratio. Last year, Savaria Corporation’s payout ratio was 89%. With results showing signs of growth, the dividend is likely safe. A downturn in the business could call that into question, especially considering the debt on the company’s balance sheet.

The annualized rate of $0.39 for U.S. investors results in a 2.4% yield.

Final Thoughts

Savaria Corporation is a small monthly dividend-paying company well-positioned to take advantage of people living longer. With most people wanting to remain in their homes, tackling accessibility and mobility challenges will likely be a major industry in the coming decade.

This positions the company in an advantageous spot. A growing business should help defend its dividends and provide the capital needed to pay down debt to a much more manageable level. Lower debt would also help to protect the dividend. Investors looking for monthly income and access to a growing population might find Savaria Corporation an attractive investment option.

Don’t miss the resources below for more monthly dividend stock investing research.

And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.

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