Here's Why I Wouldn't Touch Medical Properties Trust With a 10‑Foot Pole

Medical Properties Trust has a huge 6.6% yield, but the dividend history is a big problem for me.Medical Properties Trust (MPT 1.10%) is a real estate investment trust (REIT) that owns healthcare properties providing necessary services. Hospitals account for 60% of its revenue. That's the good news and why many investors will likely find the stock's 6.6% yield highly compelling. There's just one problem: The yield is that high for a reason. The yield is way out of line The S&P 500 index (^GSPC +0.56%) has a yield of about 1.2%. The average REIT has a yield of 3.8%. So, when you see a REIT backed by essential properties with a 6.6% yield, you need to ask yourself why the yield is so high. In this situation, the answer is that Medical Properties Trust cut its dividend. Image source: Getty Images. The dividend wasn't cut just once. The company cut it twice, with the second cut occurring after management had begun a turnaround effort. Obviously, the first turnaround plan didn't work out as well as hoped, and the shares have fallen about 75% during the past five years. The big problem for Medical Properties Trust was that it took on too much debt. When some tenants had trouble paying rent, there wasn't enough muscle on the balance sheet to handle the hit. To be fair, the dividend was recently increased, which suggests the story is improving. Indeed, the company's debt levels have been trending down, so the dividend cuts clearly provided management with much-needed breathing room. ExpandNYSE: MPTMedical Properties TrustToday's Change(-1.10%) $-0.06Current Price$5.37Key Data PointsMarket Cap$3.2BDay's Range$5.34 - $5.4652wk Range$3.95 - $6.34Volume1.1KAvg Vol6.4MGross Margin67.87%Dividend Yield6.15% However, Medical Properties Trust's leverage is still quite high relative to other REITs with attractive dividend yields, like Realty Income and W.P. Carey, which both yield about 4.9% today. And while W.P. Carey also had a dividend cut in its recent past, Realty Income has increased its dividend annually for three decades and counting. That said, W.P. Carey's dividend cut followed a strategic decision to exit the office property sector, costing the company a significant stream of revenue. The dividend was increased the very next quarter and it has been increased each quarter since. Balancing risk and reward It is entirely possible that Medical Properties Trust has turned a corner, and the future will look increasingly bright. However, given the dividend history, I'm leery about the future for the shares of a company that still is highly leveraged. Every investment requires you to compare risk against reward. It seems to me there are high-yield stocks with better risk/reward profiles than Medical Properties Trust right now. Two stocks that I suggest you consider are Realty Income and W.P. Carey. Their yields aren't as high, but their dividends appear to be backed by much stronger businesses.Read NextDec 1, 2025 •By Matt DiLallo3 High-Yield Dividend Stocks I'm Buying to Boost My Passive Income in DecemberFeb 27, 2025 •By Motley Fool TranscribingMedical Properties Trust (MPW) Q4 2024 Earnings Call TranscriptFeb 27, 2025 •By Billy DubersteinWhy Medical Properties Trust Rallied Double Digits TodayJan 25, 2025 •By Matt Frankel, CFPIs It Finally Time to Buy Medical Properties Trust Now?Jan 21, 2025 •By Matt DiLalloMy 2 Highest-Upside Stock Picks for 2025Nov 7, 2024 •By Motley Fool TranscribingMedical Properties Trust (MPW) Q3 2024 Earnings Call TranscriptAbout the AuthorReuben Gregg Brewer is a contributing Motley Fool stock market analyst covering energy, utilities, REITs, and consumer staples. He is the former director of research at Value Line Publishing, where he rose from mutual fund analyst to equity analyst before leading all research operations. Reuben holds a bachelor’s degree in psychology from SUNY Purchase, a master’s in social work from Columbia University, and an MBA from Regis University. He has been featured as a financial expert on CNBC and in the Financial Times, Barron’s, and InvestmentNews.TMFReubenGBrewerStocks MentionedMedical Properties TrustNYSE: MPT$5.37 (1.10%) $0.06S&P 500 IndexSNPINDEX: ^GSPC$6881.31 (+0.56%) $+38.09Realty IncomeNYSE: O$65.11 (2.07%) $1.38W.P. CareyNYSE: WPC$71.39 (3.74%) $2.77*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.