📉 Medical Properties Trust's dividend is in jeopardy!
Medical Properties Trust $MPW+3.2% is currently offering a dividend with a yield of around 10 %, which is significantly higher than the average of the S&P 500 index , which is 1,4 %. Even after last year's dividend cut, this real estate investment trust (REIT) is struggling. With this comes an important question for me about whether investors should prepare for another dividend cut this year.
Investing in a company focused on medical buildings is certainly not a bad choice, but Medical Properties Trust isin a tough spot. The company is having trouble collecting rent, especially from one of its largest tenants, Steward Health, which recently declared bankruptcy and plans to sell all 31of its hospitals.
Exit Steward Health may bring MPW positive long-term results, but there is no guarantee that the new owners of the hospitals will be financially stable. If the process of selling the hospitals takes longer, MPW will have to Steward to provide further financial assistance. It has already provided a loan of $75 million and more may be needed 225 million.
In addition, it has MPW a substantial debt of $10.1 billionwhich has been steadily increasing over the past decade.
For the first quarter of this year ,MPW reported a loss per share of$1.23, mainly due to write-downs associated with Steward Health. Excluding these items, normalized funds from operations (FFO) was $0.24 per share, which is higher than the current quarterly dividend of$0.15. However, this figure is lower than the $0.37 from the prior year, mainly due to a decline in revenue from Steward.
With high debt and an uncertain future, it seems to me that a further dividend cut is inevitable. With no clear outcome from the sale of the hospitals Steward's is the most important thing for MPW ...it's difficult to know what dividend it can afford. A dividend cut may be coming, but temporarily suspending the payout might not be a bad option to MPW to give MPW time to stabilise its financial situation.
Because of ongoing problems with tenants ,MPW stock has fallen more than 76 %. Until the situation surrounding Steward Health is resolved, it is important to be cautious and monitor new news.
What is your opinion on this company?
I don't think the company will go bankrupt, but I don't think it's that far from it. For me a stock I really don't want in my portfolio😁.