Based on the latest information provided, Medical Properties Trust (MPW) should not be considered a safe dividend stock in 2024. Here’s why:
1. Cutting dividends: Medical Properties Trust (MPW) cut its dividend last year due to deteriorating financial positions, indicating that the company’s financial situation is worsening. This raises concerns about the sustainability of the dividend going forward.
2. High debt load: MPW has a total debt load of $10.1 billion, and over 62% of this debt will be due between 2025 and 2027, leading to a surge in repayment costs when the debt needs to be refinanced. This puts significant pressure on the company’s finances and raises doubts about its ability to continue paying dividends.
3. Loss of major tenant: MPW’s largest tenant, Steward Health Care, filed for bankruptcy in early May, resulting in the loss of around 20% of the company’s rental revenue. This adds to MPW’s woes and further complicates its financial position.
4. Selling properties: To raise cash, MPW has been selling properties, reducing its income and collateral available to support borrowing. This raises questions about the company’s ability to maintain its current level of dividend payments.
5. Uncertain dividend future: With declining income and rising repayment costs, there is a strong likelihood that MPW’s dividend will be cut again. Investors should be aware that they may not receive the expected passive income from MPW, and they may not be able to liquidate their investment for a fair price if they hold onto the stock for too long.
Investors seeking safe dividend income are advised to look for lower-yielding options, preferably with a payout ratio well below 70% of net income and a track record of increasing revenues and earnings. An ETF like the SPDR Portfolio S&P 500 High Dividend ETF is recommended as a safer alternative because of its diversified mix of companies.
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