Savaria Corporation: A Dividend Powerhouse in the Booming Accessibility Sector

The accessibility sector is undergoing a seismic shift, driven by aging demographics, rising healthcare costs, and a growing emphasis on inclusive living. At the forefront of this transformation is Savaria Corporation (TSX:SIS), a global leader in mobility solutions for individuals with limited mobility. With a 9% compound annual growth rate (CAGR) projected for the U.S. stair lifts and climbing devices market through 2030, Savaria's strategic positioning in a secularly expanding industry is hard to ignore. But what truly sets this company apart is its disciplined financial management, robust cash flow generation, and a dividend program that balances shareholder returns with long-term sustainability.

Financial Discipline: The Bedrock of Dividend Resilience

Savaria's Q1 2025 results underscore its operational and financial strength. Revenue hit $220.2 million, a 5.2% year-over-year increase, with the Accessibility segment contributing 77% of total sales. Adjusted EBITDA margins expanded to 18.5%, up from 16.6% in Q1 2024, reflecting improved operational efficiencies. The company's cash flow generation is equally impressive: $31.3 million in operating cash flow and $10.3 million in free cash flow for the quarter, a 58% year-over-year jump.

This financial discipline is critical for sustaining its dividend. Savaria's dividend payout ratio of 70% in Q1 2025 is supported by a cash payout ratio of just 35%, meaning the company has ample liquidity to maintain and grow its dividend. With a dividend yield of 2.6%—above the Canadian market's bottom quartile (1.81%)—Savaria offers a compelling income stream for investors.

Strategic Positioning in a High-Growth Sector

The accessibility sector is not just growing—it's being reshaped by societal and technological trends. The U.S. market alone is expected to reach $1.17 billion by 2030, with Canada's segment projected to hit $170 million. Savaria's dominance in this space is evident: it controls a significant share of the stair lift and home elevator markets, with products like the Eclipse home elevator and StairLifts driving demand.

The company's recent investments in production capacity, including a new assembly line in Greenville, South Carolina, position it to meet surging demand. Savaria's 2025 guidance—$925 million in revenue and an EBITDA margin of 17–20%—reflects confidence in its ability to capitalize on these trends.

Dividend Growth: A Track Record of Consistency

Savaria has raised its dividend for nine consecutive years and maintained payouts for 21 years. Its monthly dividend schedule, with a recent increase to CA$0.045 per share, demonstrates a commitment to shareholder returns. Analysts project a 2.7% dividend yield over the next three years, suggesting continued growth.

What's more, Savaria's dividend sustainability score of 99.94% indicates strong coverage by earnings and cash flow. While the payout ratio is elevated, the company's $254.7 million in available funds as of March 2025 provides a buffer against volatility. This financial flexibility allows Savaria to balance reinvestment in growth opportunities with rewarding shareholders.

Risks and Considerations

No investment is without risk. Savaria's high payout ratio (70%) leaves less room for reinvestment compared to peers, and macroeconomic headwinds—such as potential tariffs or currency fluctuations—could impact margins. Additionally, while the accessibility sector is growing, competition from emerging players could pressure pricing.

However, Savaria's strong ESG credentials, including a published ESG report and a global manufacturing footprint, provide a competitive edge. Its focus on operational efficiency and cost savings—such as streamlined procurement and production capacity expansion—mitigates these risks.

Investment Thesis: A High-Quality Dividend Growth Candidate

Savaria's combination of sector-leading growth, financial discipline, and a sustainable dividend program makes it a standout in the dividend growth universe. For income-focused investors, the company offers a yield that outperforms the market's lower quartile while maintaining a track record of consistent increases. For growth-oriented investors, the accessibility sector's secular tailwinds—driven by aging populations and regulatory support—provide a long-term catalyst.

Investment Advice: Savaria is a buy for investors seeking a high-quality dividend growth stock with exposure to a secularly expanding industry. While the current valuation reflects optimism about future growth, the company's strong cash flow, strategic investments, and disciplined payout policy justify its premium. Investors should monitor macroeconomic risks but remain confident in Savaria's ability to navigate them.

In a world where accessibility is no longer a niche but a necessity, Savaria Corporation is not just surviving—it's thriving. For those with a long-term horizon, this company offers the rare combination of income and growth in a sector poised for decades of expansion.