Monthly Dividend Stock In Focus: Chartwell Retirement Residences

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 possibly can 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 under:

Monthly Dividend Stock In Focus: Chartwell Retirement Residences

The mixture of an above-average dividend yield and a month-to-month dividend makes Chartwell Retirement Residences a gorgeous choice for particular person traders.

However there’s extra to the corporate than simply these components. Preserve studying this text to study extra about Chartwell Retirement Residences.

Enterprise Overview

Chartwell Retirement Residences is the most important 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 targeted on unbiased dwelling (IL) and assisted dwelling (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 providers.

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 sturdy fundamentals, primarily because of an growing older inhabitants.

Supply: Investor Presentation

Housing demand for seniors is anticipated to double over the following 20 years. Greater than 200,000 new suites will likely 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 over the past decade.

General, the basics of the enterprise of Chartwell Retirement Residences seem extremely favorable and will provide sturdy pricing energy to the true property belief.

Within the first quarter of this 12 months, Chartwell Retirement Residences grew its income 6% over the prior 12 months’s quarter because of 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 value 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 12 months, from $0.53 to $0.57.

Development Prospects

As talked about above, the trade of Chartwell Retirement Residences has promising development prospects over the long term because of an growing older inhabitants. As well as, the belief is making an attempt 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 to be able to improve their returns.

Nevertheless, traders ought to observe that the belief has did not develop its backside line over the past 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 on account of excessive inflation, which has been exerting stress on the working margin of the belief.

Sadly, the sample of promising trade fundamentals however weak enterprise outcomes has been noticed in some U.S. REITs as nicely, comparable to Healthpeak Properties (DOC).

Subsequently, we desire to be conservative in our development assumptions and assume flat FFO per share over the following 5 years for Chartwell Retirement Residences.

Identical 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 12 months and thus it now consumes 90% of the working earnings of the belief.

Internet debt is $2.1 billion, which is simply 55% of the market capitalization of the inventory. Below regular enterprise situations, the corporate shouldn’t be prone to have any downside servicing its debt.

Then again, within the occasion of a extreme and extended downturn, Chartwell Retirement Residences could face some monetary stress on account of its considerably leveraged stability sheet.

Dividend & Valuation Evaluation

Chartwell Retirement Residences is presently 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 remember that the dividend is much from protected on account of 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 intense aspect, within the absence of a recession or one other downturn, the corporate shouldn’t be prone to lower its dividend sharply.

In reference to the valuation, Chartwell Retirement Residences is presently buying and selling for 23.6 occasions its anticipated FFO per share this 12 months. Given the lackluster efficiency document of the belief, we assume a good price-to-FFO ratio of 13.0.

Subsequently, the present FFO a number of is way increased than our assumed honest price-to-FFO ratio. If the inventory trades at its honest valuation stage in 5 years, it can incur an 11.2% annualized drag in its returns.

Taking into consideration 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 provide a -6.4% common annual whole return over the following 5 years.

The anticipated return indicators that the inventory is much from enticing proper now.

Remaining Ideas

Chartwell Retirement Residences operates in an trade with promising development prospects but it surely has exhibited a lackluster efficiency document. 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.

Subsequently, traders ought to watch for a a lot decrease entry level whereas they need to additionally watch for the corporate to show that it will possibly reap the benefits of the favorable fundamentals of its trade.