Revealed on July seventeenth, 2025 by Aristofanis Papadatos
Chartwell Retirement Residences (CWSRF) has two interesting funding traits:
#1: It’s providing an above-average dividend yield of three.4%, which is almost triple the common dividend yield of the S&P 500.
#2: It pays dividends month-to-month as a substitute of quarterly.
Associated: Listing of month-to-month dividend shares
You may obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter like dividend yields and payout ratios) by clicking on the hyperlink beneath:
The mix of an above-average dividend yield and a month-to-month dividend makes Chartwell Retirement Residences a horny choice for particular person traders.
However there’s extra to the corporate than simply these components. Hold studying this text to be taught extra about Chartwell Retirement Residences.
Enterprise Overview
Chartwell Retirement Residences is the biggest operator of retirement residences in Canada, with a portfolio of 160 properties and over 25,000 suites throughout Ontario, Quebec, British Columbia, and Alberta.
Its operations are centered on impartial residing (IL) and assisted residing (AL) communities, with restricted publicity to long-term care.
Chartwell Retirement Residences targets middle-to-upper earnings seniors in city and suburban markets, providing hospitality-driven housing with elective care companies.
The open-ended, actual property belief operates a vertically built-in mannequin, together with improvement, leasing, and property administration, which helps preserve consistency and management throughout its nationwide platform.
The enterprise of Chartwell Retirement Residences is characterised by robust fundamentals, primarily due to an growing older inhabitants.
Supply: Investor Presentation
Housing demand for seniors is predicted to double over the following 20 years. Greater than 200,000 new suites might be required to cowl the expansion of demand over the following decade. That is an extreme variety of new suites, as solely ~73,000 suites have been constructed during the last decade.
Total, the basics of the enterprise of Chartwell Retirement Residences seem extremely favorable and should supply robust pricing energy to the true property belief.
Within the first quarter of this yr, Chartwell Retirement Residences grew its income 6% over the prior yr’s quarter due to increased occupancy and elevated rental and repair revenues throughout its retirement residence portfolio. Funds from operations (FFO) grew 33% whereas FFO per share grew 17%, from $0.12 to $0.14.
Whereas price inflation took its toll on the working margin of the belief, the stable enchancment in occupancy and income greater than offset this headwind. We anticipate the belief to develop its FFO per share 7.5% this yr, from $0.53 to $0.57.
Development Prospects
As talked about above, the business of Chartwell Retirement Residences has promising development prospects over the long term due to an growing older inhabitants. As well as, the belief is attempting to realize development in lots of dimensions.
Supply: Investor Presentation
It tries to develop its FFO per share by buying enticing properties and disposing these with low anticipated returns. It additionally develops and repositions a few of its properties with a view to improve their returns.
Nonetheless, traders ought to observe that the belief has didn’t develop its backside line during the last decade. Its FFO per share of $0.53 in 2024 had been 4% decrease than its FFO per share of $0.55 in 2015.
Chartwell Retirement Residences has been dealing with stress in its enterprise significantly lately resulting from excessive inflation, which has been exerting stress on the working margin of the belief.
Sadly, the sample of promising business fundamentals however weak enterprise outcomes has been noticed in some U.S. REITs as properly, resembling Healthpeak Properties (DOC).
Due to this fact, we desire to be conservative in our development assumptions and assume flat FFO per share over the following 5 years for Chartwell Retirement Residences.
Similar to many actual property trusts, Chartwell Retirement Residences has a considerably weak stability sheet. As a result of surge of rates of interest since 2022, curiosity expense has elevated 47% since that yr and thus it now consumes 90% of the working earnings of the belief.
Web debt is $2.1 billion, which is just 55% of the market capitalization of the inventory. Below regular enterprise circumstances, the corporate isn’t prone to have any drawback servicing its debt.
Alternatively, within the occasion of a extreme and extended downturn, Chartwell Retirement Residences might face some monetary stress resulting from its considerably leveraged stability sheet.
Dividend & Valuation Evaluation
Chartwell Retirement Residences is at present providing an above-average dividend yield of three.4%, which is almost triple the 1.2% yield of the S&P 500.
The inventory is an fascinating candidate for earnings traders, however they need to bear in mind that the dividend is way from secure resulting from a excessive payout ratio and considerably weak enterprise efficiency.
Chartwell Retirement Residences has a payout ratio of 79%, which isn’t excessive for an actual property belief however is definitely excessive. On the brilliant facet, within the absence of a recession or one other downturn, the corporate isn’t prone to lower its dividend sharply.
In reference to the valuation, Chartwell Retirement Residences is at present buying and selling for 23.6 instances its anticipated FFO per share this yr. Given the lackluster efficiency report of the belief, we assume a good price-to-FFO ratio of 13.0.
Due to this fact, the present FFO a number of is far increased than our assumed truthful price-to-FFO ratio. If the inventory trades at its truthful valuation stage in 5 years, it’ll incur an 11.2% annualized drag in its returns.
Considering the flat anticipated FFO per share, the three.4% present dividend yield but in addition an 11.2% annualized headwind of valuation stage, Chartwell Retirement Residences may supply a -6.4% common annual whole return over the following 5 years.
The anticipated return indicators that the inventory is way from enticing proper now.
Remaining Ideas
Chartwell Retirement Residences operates in an business with promising development prospects nevertheless it has exhibited a lackluster efficiency report. The inventory is providing an above-average dividend yield of three.4% however it’s richly valued proper now and due to this fact it’s unattractive.
Due to this fact, traders ought to anticipate a a lot decrease entry level whereas they need to additionally anticipate the corporate to show that it could possibly make the most of the favorable fundamentals of its business.
Extra Studying
Don’t miss the assets beneath for extra month-to-month dividend inventory investing analysis.
And see the assets beneath for extra compelling funding concepts for dividend development shares and/or high-yield funding securities.
Thanks for studying this text. Please ship any suggestions, corrections, or inquiries to [email protected].
