| Lock
in Yields of 8.7% with Shares of this Healthcare REIT |
Published: July 19, 2006
As its name suggests, Medical Properties Trust (MPW) is a real
estate investment trust that receives rental revenues by leasing some 15
healthcare facilities to rehab and long-term care centers, outpatient
clinics, and small community hospitals. Most of its lease agreements
require the tenant to pay all operating costs.
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The company recently upped its quarterly dividend a generous +19% to
25 cents per share, which equates to $1.00 annually. That gives the
stock a forward yield of 8.7% at today's share price. (Based on a
payment of 81 cents over the last four quarters, the trailing yield is
7.1%.)
Medical Properties was formed in 2003 and went public last July. The
latest payout represents the firm's fifth consecutive quarterly dividend
increase since going public. Management said it expects that trend to
continue as the trust buys and develops additional properties over the
next couple of years. The trust has a very low payout ratio of 51%,
giving it ample leverage to increase dividends without hurting its
balance sheet.
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Editor's
Note: Carla Pasternak's model portfolios focus
exclusively on investment opportunities with ultra-high yields.
In fact, in each of her monthly High-Yield Investing
newsletters she provides readers with an entire portfolio of
stocks, funds and preferreds that are delivering annual
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even be considered for inclusion in this portfolio, a particular
investment opportunity must deliver cash payments of at least
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For the latest quarter, MPW logged earnings of 25 cents per share,
+47% higher than last year's. Full-year earnings are expected to grow
+55% this year and +17% next year, maintaining a steady long-term growth
rate of +6% over the next five years.
With these robust growth projections and latest dividend increase, it's
no wonder the stock is trading near its 52-week highs. That said, the
shares are still reasonably priced at around 8 times next year's
projected earnings.
Action to Take: Medical Properties is firing on all
cylinders. Its aggressive acquisition and development plans should fuel
earnings and drive dividend growth. As such, I like MPW as a more
conservative investment idea. However, investors should be aware that as
a real estate investment trust, MPW's distributions do not qualify for
the 15% dividend tax rate. Therefore, this security is best held in a
tax-advantaged account like an IRA.
Good investing!
Carla Pasternak
Editor
High-Yield Investing
http://www.StreetAuthority.com
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Carla
Pasternak draws on a variety of financial backgrounds to make profitable
calls on income-generating stocks for her readers.
Carla has
been employed in the investment industry for more than two decades. In
addition to her work as a writer for several other nationally recognized
financial publishers, her previous experience includes a position as
President of a well-respected investor relations firm. She has also been
writing shareholder reports for public companies (annual reports,
speeches, corporate profiles, slide shows, etc.) since 1980.
A highly
successful investment analyst, Carla specializes in high-yield,
income-paying stocks. In that pursuit, she's always mindful to select
companies that not only pay rich dividends, but that also have the
potential to deliver strong long-term capital gains.
On the
educational front, Carla holds both MBA and Ph.D. degrees. When she's
not watching the market, she's teaching business courses at the college
level and managing several million dollars in portfolio assets.
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