MPW Stock: Real Estate Company Paying a Dividend Yield of 7.3%
MPW Stock Paying Out a Dividend Yield of 7.31%
One way to generate market-beating returns is to make investments in sectors that will have increased demand in the future.
To determine the future outlook for a business sector, take a look at the current population demographic, then determine how changes would influence different sectors. Are seniors going to account for a larger percentage of the population? Is the overall population going to grow? If you determine that the answer to both these questions is “yes,” then the best segment to look at is the medical sector.
The medical sector is a low-risk method of investing in a growing population. The stock I will be using today to support this is Medical Properties Trust, Inc. (NYSE:MPW) stock.
Medical Properties Trust is a real estate company that owns healthcare facilities across the U.S. and Europe. There are more than 200 properties in the company’s portfolio, including acute care hospitals, inpatient rehabilitation facilities, and assisted living and nursing homes.
But is MPW a stock worth future consideration? That’s what we’re here to find out.
Is There Growth in MPW Stock?
First, let’s take a look at the potential for future population growth. With a larger population, there is an increased chance of seeing more demand for Medical Properties’ facilities. Changes to the senior population will especially affect company growth, because they tend to use healthcare facilities much more than younger individuals.
According to a study by the U.S. Census Bureau, the U.S. is seeing a major shift in the population. In 2014, seniors made up 15% of the U.S. population. However, the study projects that in 2060, the U.S. population will go from 319 million to 417 million, with seniors accounting for 25% of the population. (Source: “Projections of the Size and Composition of the U.S. Population: 2014 to 2060,” U.S. Census Bureau, last accessed June 13, 2017.)
The company is well aware of these expectations. Just last month, Medical Properties in 10 acute care hospitals and one behavioral healthcare facility. The move not only satisfies future demand needs, but also diversifies the portfolio by containing more properties. The assets are in high-growth markets in Utah, Arizona, Texas, and Arkansas. (Source: “Medical Properties Trust, Inc. to Invest $1.4 Billion in Ten Acute Care Hospitals and One Behavioral Health Facility,.” Medical Properties Trust, Inc., May 19, 2017.)
There is always the possibility of more properties being acquired, increasing the company’s total income. They would also come to be reflected in the share price, with MPW stock trading higher.
The dividend is paid out every January, April, July, and October, and it has been steady and growing as time goes on. Take the past three years, in which the dividend has risen by 20%, increasing the personal dividend yield based on the purchase price of the shares. Patience leads to a higher dividend on a per-share basis, which increases the average dividend yield.
The dividend can continue to grow as the population does. Also with acquisitions, it increases the ability of the company to generate more cash flow for the business, which flows down to the bottom line.
The idea of more dividend hikes is supported because earnings have increased. Here is a chart of past earnings growth.
The growth in earnings supports dividend hikes; future earnings potentially even more so. That’s because projected earnings are expected to be on the rise and continue the trend of higher earnings. Below is a chart detailing the expected annual earnings.
Earnings in the current year are expected to be down by $0.02, in part due to the recent acquisition of the 10 hospitals and behavioral healthcare facility. However, the important thing to take away is that the trend is on an upward slope.
Picking up shares would earn a dividend yield of 7.31%. With future demand and more properties being bought up by Medical Properties Trust, the share price could see an increase, which only adds to your bottom line.