Savaria Corporation: A Steady Dividend Machine in the Silver Economy

As the global population ages, demand for accessibility solutions like stairlifts, medical beds, and home modifications is surging. Savaria Corporation (CVE:SVR), a Canadian leader in this space, has positioned itself at the forefront of this demographic megatrend. But what makes Savaria stand out isn't just its market dominance—it's its unwavering dividend discipline. Over the past decade, the company has delivered a 14% compound annual dividend growth rate, with its most recent 3.85% hike in 2024 underscoring its commitment to rewarding shareholders. This article dissects whether Savaria's dividends are sustainable and whether its stock offers a compelling opportunity for income investors.

The Dividend Story: Consistency Amid Growth

Savaria's dividend history is a masterclass in reliability. Since 2015, it has increased its dividend every year, with a payout ratio averaging 77% of earnings—comfortably below the danger zone of 100%. The latest increase in September 2024, raising the monthly dividend from CAD $0.0433 to $0.045, marked a 3.85% annualized boost. This move wasn't arbitrary: it reflected strong fundamentals, including a 32.5% jump in Q1 2025 earnings and a dividend cover ratio of 2.0, meaning earnings easily absorb payouts.

What's more, the dividend's annual yield of 2.9% (as of June 2025) is competitive with the Canadian market's top 25% of dividend payers, even as the company reinvests heavily in growth. Analysts project this yield to edge higher to 3.0% over the next three years, making it a solid income play.

Why Demographics Favor Savaria

The aging population is Savaria's tailwind. By 2050, 21% of Canadians will be over 65, and similar trends exist in Europe and the U.S. This demographic shift is driving demand for home accessibility solutions, a market Savaria dominates through its brands like ARMO, Harmek, and Stannah. The company's $220M in Q1 2025 revenue (up 5.2% year-over-year) and 17.2% EBITDA growth highlight its ability to capitalize on this trend.

Moreover, Savaria isn't just a North American player. Its global footprint—2,400 employees and factories in five regions—positions it to tap into markets like China and Europe, where aging populations are equally pronounced.

The Contrarian Opportunity: A Low Yield, High Quality Play

At first glance, Savaria's 2.9% yield might seem modest compared to high-yield sectors like real estate or utilities. But this is a quality over quantity situation. The stock's price-to-earnings ratio of 18x is fair for a company with a 11.8% dividend growth rate and $243M in cash reserves. Meanwhile, its dividend yield has historically lagged its growth, creating a potential buying opportunity for those willing to look past short-term metrics.

Consider this: while peers in the machinery sector yield around 1.7%, Savaria's yield is 65% higher—and it's growing faster. The low yield also suggests the stock isn't yet fully recognized by income-focused investors, offering a hidden edge.

Risks on the Horizon

No investment is risk-free. Savaria's geographic expansion into emerging markets like China carries execution risks, and economic downturns could slow demand for home modifications. Additionally, the company's payout ratio has crept up to 77%, leaving less room for earnings dips.

Yet, the balance sheet is robust: net debt/EBITDA of 1.63 means no immediate liquidity threats, and the dividend's 2.0 cover ratio offers a safety net. While not immune to macroeconomic headwinds, Savaria's recurring revenue model (many customers buy maintenance plans) buffers against volatility.

The Bottom Line: Buy for Dividends and Growth

Savaria Corporation is a contrarian gem for income investors. Its monthly dividends offer stability, its aging population tailwind is structural, and its financial fortress supports growth. At current prices, the stock is a compelling buy for those seeking:

1. Predictable income: A 2.9% yield with a 14% dividend growth track record.
2. Demographic exposure: A secular trend that will outlast economic cycles.
3. Global diversification: A North American stock with earnings in 20+ countries.

Action to Take: Initiate a position in Savaria with a 1–3 year horizon. Set a trailing stop-loss at -20% to protect gains, and hold for the monthly dividend checks. While risks exist, the company's fundamentals and strategic moat make it a buy.

In a world where income is scarce, Savaria's blend of dividend reliability and secular growth is rare—and worth owning.

Data as of June 19, 2025. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.