Monthly Dividend Stock In Focus: Chartwell Retirement Residences

Printed 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 sort of triple the typical dividend yield of the S&P 500.

#2: It pays dividends month-to-month as a substitute of quarterly.

Associated: Checklist 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 under:

Monthly Dividend Stock In Focus: Chartwell Retirement Residences

The mix of an above-average dividend yield and a month-to-month dividend makes Chartwell Retirement Residences a beautiful possibility for particular person traders.

However there’s extra to the corporate than simply these elements. Maintain studying this text to be taught 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 centered on unbiased dwelling (IL) and assisted dwelling (AL) communities, with restricted publicity to long-term care.

Chartwell Retirement Residences targets middle-to-upper revenue seniors in city and suburban markets, providing hospitality-driven housing with non-obligatory care companies.

The open-ended, actual property belief operates a vertically built-in mannequin, together with growth, 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 because of an ageing inhabitants.

Supply: Investor Presentation

Housing demand for seniors is predicted to double over the subsequent 20 years. Greater than 200,000 new suites might be required to cowl the expansion of demand over the subsequent 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 should provide robust pricing energy to the actual 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 larger 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 strong 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.

Progress Prospects

As talked about above, the trade of Chartwell Retirement Residences has promising development prospects over the long term because of an ageing inhabitants. As well as, the belief is attempting to attain 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 the intention to improve their returns.

Nonetheless, traders ought to word that the belief has did not develop its backside line over the past decade. Its FFO per share of $0.53 in 2024 have been 4% decrease than its FFO per share of $0.55 in 2015.

Chartwell Retirement Residences has been dealing with strain in its enterprise significantly lately as a result of excessive inflation, which has been exerting strain 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 properly, equivalent to Healthpeak Properties (DOC).

Due to this fact, we choose to be conservative in our development assumptions and assume flat FFO per share over the subsequent 5 years for Chartwell Retirement Residences.

Similar to many actual property trusts, Chartwell Retirement Residences has a considerably weak steadiness sheet. Because of the 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 revenue of the belief.

Internet debt is $2.1 billion, which is barely 55% of the market capitalization of the inventory. Beneath regular enterprise circumstances, the corporate shouldn’t be more likely to have any drawback servicing its debt.

Alternatively, within the occasion of a extreme and extended downturn, Chartwell Retirement Residences could face some monetary strain as a result of its considerably leveraged steadiness sheet.

Dividend & Valuation Evaluation

Chartwell Retirement Residences is presently providing an above-average dividend yield of three.4%, which is sort of triple the 1.2% yield of the S&P 500.

The inventory is an attention-grabbing candidate for revenue traders, however they need to bear in mind that the dividend is much from secure as a result 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 actually excessive. On the intense aspect, within the absence of a recession or one other downturn, the corporate shouldn’t be more likely to minimize 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.

Due to this fact, the present FFO a number of is far larger than our assumed honest price-to-FFO ratio. If the inventory trades at its honest valuation degree 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 degree, Chartwell Retirement Residences might provide a -6.4% common annual whole return over the subsequent 5 years.

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

Last Ideas

Chartwell Retirement Residences operates in an trade with promising development prospects however it 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 subsequently 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 might probably reap the benefits of the favorable fundamentals of its trade.