Medical Properties Trust

Stock: MPW

Rating: Strong Buy

Author: Waleed M. Tariq

Overview

  • Medical Properties Trust acquires and develops net-leased hospital buildings.
  • Most of the company’s 438 properties are in the US and UK.
  • The company owns 207 acute care, 111 rehabilitation, 58 behavioral health, 42 ER/URC, and 20 long-term acute care hospitals.

Bullish

  • REITs do better in moderately high inflation environments.
  • Medical Properties Trust has increased its dividend for 9 years in a row.
  • MPW’s current valuation is attractive for investors.

Bearish

  • The corporation has huge debt which is a concern to investors.

Diversify with REITs

  • REITs offer competitive returns from dividends and share price growth. Low correlation makes them good portfolio diversifiers, mitigating risk and boosting returns.
Institutional attitude towards REITS
REIT.com

Slow yet steady dividend growth

  • At $20.5 a share, the annualized Dividend Yield of 5.65% beats the Healthcare Real Estate sector’s average yield of 4.05%, the REIT industry’s 2.85%, and the S&P 500’s 1.250%.
  • The company has increased dividends every year for almost a decade, albeit slightly.

Valuation

  • Healthcare REITs have a price-to-FFO of 19.78. The stock would be $34 at 19.78 P/FFO, a 70% gain. P/FFO cannot be used alone to determine valuation, even if companies with lower P/E or P/FFO multiples are normally better placed.

Conclusion

  • Current stock value gives investors an attractive entry opportunity. MPW is an excellent income stock for those seeking passive income.