High Dividend Stocks: Medical Properties Trust, Inc. (NYSE:MPW)
By: Ned Piplovic,
In addition to being a high dividend stocks, Medical Properties Trust’s . (NYSE:MPW) superior position in a growing sector increases the likelihood of continued dividend boosts and capital gains over an extended time horizon.
However, while the Medical Properties Trust’s current status as one of the high dividend stocks makes this equity look like a potentially promising investment opportunity, it is important to note that the company faced some headwinds early in its existence. Just a few years after it was formed and after it initiated a streak of annual dividend hikes, the trust had to cut its dividend payout nearly 26% in the aftermath of the financial crisis in 2008. However, after five years of flat dividend payouts, this real estate investment trust (REIT) resumed offering annual dividend hikes. Since then, it has boosted its annual distribution over the past six consecutive years.
Through its unique program of offering up to 100% financing for the expansion of existing facilities and new acquisitions, as well as for new development projects, this trust offers attractive terms to the operators of medical facilities. Compared to how the industry only offers financing up to approximately 70%, the Medical Properties Trust’s offering allows clients to maintain a higher cash position for operational support.
Over the past decade, the trust has managed to grow its assets to more than $6 billion and has assembled a portfolio of diversified medical facilities within the health care sector. Considering that health care spending in the United States is on track to reach 20% of Gross Domestic Product (GDP) by 2024, the Medical Properties Trust appears to have a strong outlook as one of the high dividend stocks. It can also be considered as one of the stocks that have a high total return.
Medical Properties Trust, Inc. (NYSE:MPW)
Based in Birmingham, Alabama, and founded in 2003, Medical Properties Trust, Inc. is a REIT that focuses exclusively on providing capital to acute health and medical care facilities through long-term leases of multiple facility types. Rehabilitation Hospitals provide inpatient and outpatient rehabilitation services for patients who are recovering from traumatic injuries, organ transplants, surgery, strokes and orthopedic conditions. Long-Term Acute Care Hospitals provide extended hospital care for stays that generally last more than 24 days and generally involve patients with medically complex cases. Ambulatory Surgery Centers are typically freestanding facilities and are designed to offer simple procedure surgeries that do not require an overnight stay. Patients generally have the surgery and return home on the same day. There is only a brief post-surgery recovery period at the facility.
Furthermore, Women’s and Children’s Hospitals provide obstetrics, gynecology and other women’s healthcare services, as well as neonatology, pediatrics and other services for their children. Regional and Community Hospitals offer general medical and surgical services within a specific market area or draw service support from a significant number of local physicians. Medical Office Buildings — either integrated with or adjacent to other medical facilities — offer administrative and other support services. Lastly, Other Single-Discipline Facilities are specialized single-discipline healthcare facilities, such as cancer hospitals, ophthalmology centers, orthopedic hospitals, cardiovascular hospitals etc.
Currently, the REIT has more than 200 facilities spread across 27 states in the United States. In addition to these domestic facilities, Medical Properties also has 76 facilities in Germany, eight in Italy, two in the United Kingdom and one in Spain.
High Dividend Stocks: Medical Properties Trust Share Price
After an 18-month sideways trend that began in late 2016, the share price embarked on its current uptrend in April 2018. Since then, the share price has advanced more than 35% from its 52-week low of $13.90 in the last week of June 2018 to its new all-time high of $18.85 on April 11, 2019. Since peaking in early April, the share price has pulled back 3.4% and closed at $18.21 on June 21, 2019. This closing price was nearly 30% higher than it had been one year earlier and was 31% above its 52-week low from late June 2018.
High Dividend Stocks: Medical Properties Trust Dividends
The REIT’s current $0.25 quarterly dividend payout corresponds to a $1.00 annualized payout and currently yields 5.5%. Medical Properties Trust’s robust asset appreciation over the past 12 months has also pushed the current dividend yield more than 13% below the REIT’s own 6.37% average yield over the past five years.
However, while trailing its own five year average, Medical Properties Trust’s current yield is in line with the 5.53% simple average yield of the Health Care Facilities REITs industry segment’s only dividend-paying companies. Furthermore, the trust’s current yield is nearly 43% higher than the 3.85% average yield of all this REIT’s peers from the Health Care Facilities REITs segment. Moreover, the current yield has also outperformed the 3.08% average yield of the overall Financial sector by nearly 80%.
Since resuming annual dividend hikes in 2014, the trust has enhanced its annual dividend payout amount 25%. This growth rate corresponds to an average growth rate of 3.8% per year over the past six years. The REIT’s current annualized dividend of $1.00 corresponds to a 37% dividend payout ratio against the current $2.69 annualized earnings distribution. This payout ratio is well with the 30% to 50% sustainable range and indicates that this REIT should be able to easily support more dividend boosts. Furthermore, the current ratio is also significantly lower than the trust’s own 138% payout ratio average over the past five years.
The share price experienced two pullbacks over the past five years, which suppressed longer-term total returns — especially over the past three years. The 43% three-year total return on shareholders’ investments was just slightly higher than the 36% total return over the trailing 12-month period. However, the share price volatility did not affect the five-year total return as much. The shareholders have enjoyed a total return of almost 72% over the past five years.
Dividend increases and dividend decreases, new dividend announcements, dividend suspensions and other dividend changes occur daily. To make sure you don’t miss any important announcements, sign up for our E-mail Alerts. Let us do the hard work of gathering the data and sending the relevant information directly to your inbox.
In addition to E-mail Alerts, you will have access to our powerful dividend research tools. Take a quick video tour of the tools suite.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.