Investors who want to cash in on Medical Properties Trust Inc’s (NYSE:MPW) upcoming dividend of $0.24 per share have only 3 days left to buy the shares before its ex-dividend date, 06 December 2017, in time for dividends payable on the 11 January 2018. What does this mean for current shareholders and potential investors? Below, I will explain how holding MPW can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. See our latest analysis for MPW
5 checks you should do on a dividend stock
When researching a dividend stock, I always follow the following screening criteria:
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Is it the top 25% annual dividend yield payer?
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Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?
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Has dividend per share risen in the past couple of years?
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Does earnings amply cover its dividend payments?
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Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
How does Medical Properties Trust fare?
Medical Properties Trust has a payout ratio of 123.56%, meaning the dividend is not sufficiently covered by its earnings. Going forward, analysts expect MPW’s payout to reduce to 99.56% of its earnings, which leads to a dividend yield of around 7.19%. However, EPS should increase to $0.99, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If dividend is a key criteria in your investment consideration, then you need to make sure the dividend stock you’re eyeing out is reliable in its payments. Not only have dividend payouts from Medical Properties Trust fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. This means that dividend hunters should probably steer clear of the stock, at least for now until the track record improves. Compared to its peers, MPW has a yield of 6.96%, which is high for equity real estate investment trusts (reits) stocks.
What this means for you:
Are you a shareholder? Whilst there are few things you may like about Medical Properties Trust from a dividend stock perspective, the truth is that overall it probably is not the best choice for a dividend investor. It may be valuable exploring other dividend stocks as alternatives to MPW or even look at high-growth stocks to complement your steady income stocks. I suggest continuing your research by exploring my interactive free list of dividend rockstars as well as high-growth stocks to potentially add to your holdings.