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Medical Properties Cheers Investors With 4% Hike in Dividend

Zacks Equity Research

Medical Properties Trust, Inc. MPW — also known as MPT — announced that its board of directors have approved a 4% sequential hike in quarterly dividends to 26 cents.

The company will pay the raised dividend on Oct 10, to shareholders on record as of Sep 12, 2019. Further, based on the increased rate, the annual dividend comes to $1.04 per share, up from the prior annual rate of $1 per share, leading to an annualized yield of 5.8%, considering MPT’s closing price of $17.82 on Aug 15.

Solid dividend payouts remain the biggest enticement for REIT investors and MPT remains committed toward boosting shareholder wealth. In fact, per management, the increase in quarterly dividends indicates its sixth consecutive year of such hike.

Outlining its strategy, management noted that the company remains focused to grow its funds from operations (FFO) on the back of immediately-accretive acquisitions. Moreover, execution of MPT’s diverse pipeline will enable future dividend increases.

Impressively, only half-way through the year, MPT has already surpassed its 2019 acquisitions goal. Increased opportunities in acute healthcare real estate with significant domestic and international potential acquisition targets has likely enabled the company to announce completed and pending transactions aggregating $3.4 billion in the year so far. In fact, in second-quarter 2019, the company acquired 46% stake in Infracore SA, and purchased 11 Australian hospitals operated by Healthscope Ltd.

These efforts will likely be accretive for bottom-line expansion, thereby enabling the company to sustain its current hiked dividends. In fact, MPT’s ability to sustain the hiked dividends depends on FFO growth and payout ratio. The company’s current payout ratio is nearly 78%.

Additionally, the company’s performance depicts a robust FFO picture. Over the next five years, FFO is projected to grow at a rate of 4%. The Zacks Consensus Estimate for 2019 FFO per share is $1.33.

Shares of this Zacks Rank #3 (Hold) company have rallied 19.3% over the past year as compared with the industry’s growth of 10.7%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Stocks to Consider

American Tower Corporation AMT currently carries a Zacks Rank of 2 (Buy). The Zacks Consensus Estimate for 2019 FFO per share was revised marginally upward to $7.87 over the past month.

Alexandria Real Estate Equities, Inc. ARE holds a Zacks Rank of 2, at present. The Zacks Consensus Estimate for the current-year FFO per share remained unchanged at $6.98 in the past month.

HCP, Inc. HCP carries a Zacks Rank of 2, presently. The Zacks Consensus Estimate for FFO per share for the ongoing year has been revised marginally upward to $1.75 over the past week.

Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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