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Yahoo
16-05-2025
- Business
- Yahoo
2 Catalysts Could Cause This 6%-Yielding Dividend Stock to Soar by the End of 2026
Medical Properties Trust has shored up its tenant base and financial profile. It expects its rental income to steadily rise over the next two years. That will give it more flexibility to return additional cash to shareholders. 10 stocks we like better than Medical Properties Trust › Shares of Medical Properties Trust (NYSE: MPW) have gotten shellacked over the past few years. The hospital-focused real estate investment trust (REIT) lost nearly 80% of its value from its peak a few years ago. Weighing on the stock has been a barrage of tenant issues and higher interest rates. Those problems forced the REIT to take several actions to shore up its portfolio and financial profile, including selling properties and slashing its dividend a couple of times. Those moves are finally starting to pay off. The REIT expects its rental income to rise steadily over the next two years, which could give it more cash to return to shareholders. These catalysts could cause the stock to soar by the end of next year. Two of Medical Properties Trust's former top tenants filed for bankruptcy over the past couple of years. That has had a meaningful impact on the REIT's rental income. However, the healthcare REIT has since replaced its largest tenant with several financially stronger operators. They started paying rent on those properties during the first quarter, contributing $4 million in rental income. Rents from these tenants will steadily rise over the next two years until they reach a fully stabilized rate. Medical Properties Trust expects to receive about $23 million in rent from these tenants in the fourth quarter of this year, which is around a $90 million annualized rate. This rental income will continue growing until it reaches an annualized rate of $160 million by October of 2026. That gives the company a lot of visibility into its future rental income. CEO Ed Aldag said on the REIT's recent first-quarter conference call, "With the progress of our new operators are making across most markets, the steady contributions from our stabilized portfolio, we remain confident in our ability to reach total annualized cash rent of more than $1 billion once our new tenants are fully ramped." On top of that, the REIT didn't receive any revenue from its investment related to another bankrupt tenant (Prospect Medical) or its investment in certain real estate assets in Colombia. Any recovery from these assets, either by finding new tenants for the Prospect properties or selling the assets, would add to its operating results or balance sheet strength in the future. The expected rise in Medical Properties Trust's rental income should help boost its stock price in the coming quarters. Medical Properties Trust has had to conserve cash over the past few years to shore up its balance sheet. As a result, it had to cut its dividend twice. However, its efforts to bolster its balance sheet have worked. The REIT was able to issue $2.5 billion of bonds during the first quarter, which Aldag said would provide sufficient liquidity to cover all debt maturities through 2026. Meanwhile, with its balance sheet back on a firmer foundation, its tenant profile improved, and its rental income rising, it shouldn't have trouble refinancing future debt maturities. Because of that, Medical Properties Trust should have a lot more flexibility to return cash to shareholders beyond its current dividend level. Aldag said in the first-quarter earnings press release that the REIT is "well positioned to grow earnings from our existing in-place real estate portfolio, access capital for accretive growth in a uniquely attractive market, and deliver growing dividends and other returns to our shareholders." The hospital owner could start to rebuild its dividend as its rental income rises. That would add to an attractive income stream that yields over 6%. In addition, chief financial officer Steve Hamner said on the call that the company could look to complete "other transactions to reposition and rationalize our equity value." Among the options it could consider is repurchasing its shares. Given the steep drop in its stock price, repurchases would be highly accretive to shareholders and could give shares a big boost. After sinking over the past several years, shares of Medical Properties Trust could finally start recovering. Rising rental income from replacement tenants will give the REIT more cash to return to shareholders. The hospital owner could start rebuilding its dividend or buy back its beaten-down stock. Those catalysts could help propel the stock price, which, when adding in its dividend income, could enable Medical Properties Trust to produce a strong total return over the next couple of years. Before you buy stock in Medical Properties Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Medical Properties Trust wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $613,951!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $796,353!* Now, it's worth noting Stock Advisor's total average return is 948% — a market-crushing outperformance compared to 170% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 12, 2025 Matt DiLallo has positions in Medical Properties Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. 2 Catalysts Could Cause This 6%-Yielding Dividend Stock to Soar by the End of 2026 was originally published by The Motley Fool
Yahoo
03-03-2025
- Business
- Yahoo
This 5.4%-Yielding Dividend Stock Is Finally on the Road to Recovery
The past several years have been extraordinarily challenging for Medical Properties Trust (NYSE: MPW). The hospital-focused real estate investment trust (REIT) has battled tenant-related headwinds, which put pressure on its cash flow and balance sheet. That came when interest rates surged, making it very difficult for the company to refinance maturing debt. As a result, it had to take several actions to shore up its portfolio and financial profile, including selling properties and cutting its dividend a couple of times. Those initiatives have helped cure its ailing balance sheet, and now the healthcare REIT is finally on the road to recovery. That also means its 5.4%-yielding dividend is safe. Medical Properties Trust's CEO, Edward Aldag, discussed the company's progress in addressing its issues on the fourth-quarter conference call. He noted: "We entered 2024 with a plan to execute $2 billion in liquidity transactions. We significantly outperformed that target by executing approximately $3 billion in liquidity transactions during the year, sales that repeatedly provided third-party validation of our real estate underwriting." The REIT sold several properties last year, raising cash to repay maturing debt. That took some pressure off its financial profile, allowing the REIT to refinance other maturing debt. Last May, it closed an $800 million 10-year loan secured by a portfolio of U.K. hospital properties, which it used to repay debt maturing in late 2024 and early 2025, extending those maturities out several more years. Additional actions put the company in the position to continue shoring up its liquidity. Aldag commented: "In early 2025, we were able to further strengthen our liquidity issuing more than $2.5 billion of seven-year secured bonds at a blended coupon of 7.88%. With this successful offering, we now have more than enough liquidity to cover all upcoming debt maturities through 2026." That bond sale enabled the REIT to completely address the largest tranche of its maturing debt, giving it a lot more breathing room. In addition to addressing its balance sheet, Medical Properties Trust has spent much of the past year working with two financially challenged tenants, both of which ultimately declared bankruptcy. The REIT replaced its largest tenant with six new operators. Those new tenants are already seeing improving volumes, increasing patient satisfaction, and stabilizing staffing and supplies. They will start paying rent on the properties this year, with the rates ramping up through the end of next year, when rents will stabilize at about 95% of the rate paid by its former top tenant. Meanwhile, the REIT recently agreed to a settlement allowing the other bankrupt tenant to market and sell its hospital operations and the associated real estate. This agreement positions the REIT for enhanced recoveries through either the sale of its real estate holdings or new leases with operating tenants. "As a result of our team's extraordinary efforts throughout the year, we now have a stronger balance sheet and a more diverse operator mix, Aldag stated on the call. He further commented: The vast majority of our portfolio continues to generate predictable rent payments. And as we said last quarter, assuming no additional changes to our portfolio and inclusive of our share of real estate joint ventures, we expect total annualized cash rent of more than $1 billion once our new tenants are fully ramped. With our debt maturities covered through 2026, the road is clear for the rebound to take shape. The future is bright for MPT, and we look forward to the year ahead. The company expects its portfolio to produce strong and growing cash flow over the next two years as new operators ramp up their rental payments while existing tenants pay escalating rents from contractual increases. That positions the REIT to grow value for shareholders. It can use its rising post-dividend free cash flow to create additional value for investors through potentially making new investments in hospital real estate, buying back some of its beaten-down shares, or rebuilding its dividend. Medical Properties Trust's tenant and balance sheet issues have weighed heavily on its stock price and dividend. Shares currently sit 75% below the all-time high, while two dividend cuts have the payout down 72%. However, with its portfolio expected to generate growing cash flows, the REIT's value should start rising. That recovery could also enable it to start rebuilding its dividend. Medical Properties Trust is a compelling option for those seeking a potentially high-income, high-upside investment opportunity. Before you buy stock in Medical Properties Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Medical Properties Trust wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $765,576!* Now, it's worth noting Stock Advisor's total average return is 890% — a market-crushing outperformance compared to 173% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of February 24, 2025 Matt DiLallo has positions in Medical Properties Trust and has the following options: short March 2025 $4 puts on Medical Properties Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This 5.4%-Yielding Dividend Stock Is Finally on the Road to Recovery was originally published by The Motley Fool Sign in to access your portfolio
