This Ultra-High-Yield Dividend Stock's Biggest Headwind is About to Become a Massive Tailwind
Medical Properties Trust (NYSE: MPW) stock has gotten clobbered over the past few years. Shares are down nearly 80% from their peak in 2022. That has driven its dividend yield up to over 10%, even after it cut its payout by nearly half last year.
The biggest weight on its stock has been the financial troubles of top tenant Steward Health Care, which recently filed for bankruptcy. However, the healthcare REIT's relationship with Steward should soon go from a headwind to a major tailwind as new operators take over most of those facilities. This shift could act as a significant catalyst for the stock while finally giving investors more clarity on the dividend's long-term outlook.
Steward's recent bankruptcy was a key topic of conversation on Medical Properties Trust's first-quarter earnings conference call. The REIT's management team made two key points about the filing on the call. First, CEO Ed Aldag highlighted that "no mention was made of rent as a contributor to Steward's distress" in the bankruptcy filing. He said that rent, which "represents only a small fraction of a hospital's total revenue, is virtually never the primary cause of financial stress for hospitals." Steward's stress has come from other factors, like surging labor rates, inflating costs, and reimbursement rates. Furthermore, he noted, if Steward or another hospital operator wasn't paying rent, they'd make interest and principal payments on their hospitals because "buildings are not free."
Source Fool.com
