I'm usually leery of really high dividend yields. They make me nervous because I wonder how sustainable the dividends will be. 

But that doesn't mean that I dislike all stocks with extremely high yields. There are several that I do find attractive. If I could buy only one ultra-high-yield dividend stock, though, it would be Medical Properties Trust (MPW -1.10%).

A dividend lover's dream

Quite frankly, Medical Properties Trust (MPT) is a dividend lover's dream. The company is organized as a real estate investment trust (REIT). That means it must distribute at least 90% of taxable income to shareholders in the form of dividends.

MPT has consistently paid a dividend since 2004, the year after the company was founded. The REIT has increased its dividend for 10 consecutive years.

Throughout much of its history, MPT's dividend yield has topped 5% -- the threshold I use to determine whether or not a yield is high. The yield currently stands at an especially juicy 7.2%.

MPT shouldn't have any problems funding its dividend. The company's payout ratio stands at 57%, a very comfortable level for a REIT.

A strong underlying business

Don't be alarmed by MPT's recent stock performance. Shares have plunged more than 30% year to date. However, the company's underlying business remains strong.

There are two primary reasons behind MPT's share price deterioration. First, articles published by The Wall Street Journal raised questions about the stability of Steward, MPT's largest tenant. Second, interest rates have gone up. This makes borrowing more expensive for the company. As a result, its growth could be curtailed. 

But MPT CEO Ed Aldag highlighted Steward's improved financial position in the REIT's second-quarter conference call. CFO Steve Hamner also added an important point that the 41 hospitals leased to Steward "would be very attractive to competitors and other potential replacement operators." In other words, even if Steward has financial problems, MPT firmly believes that it would be able to easily find replacement tenants for all of the properties.

Higher interest rates could be problematic. Hamner noted in the Q2 call that MPT's acquisitions this year will likely be on the low end of its projected range of $1 billion to $3 billion. However, he also said that "sellers are beginning to adjust their expectations in line with changes in the cost of real estate capital." My view is that higher interest rates won't hamper MPT's growth too much over the long term. 

MPT's Q2 results underscore the strength of its underlying business. The company's revenue increased nearly 5% year over year to $400.2 million. Its normalized funds from operations jumped 7% to $0.46 per share. Net income soared 65% to $189.6 million.

Looking ahead

The demand for hospital services will almost certainly increase over time with aging populations in the U.S. and several of the other nine countries where MPT operates. The REIT's underwriting strategy, which focuses on the individual facility, should minimize the risk from operators' financial challenges.

MPT continues to expand in international markets. It recently closed on an acquisition of a hospital in Colombia. The company is also beginning the next phase of growth in Spain, with three new hospitals scheduled to be completed over the next couple of years.

The stock is attractively valued with shares trading at only nine times expected earnings. I think that MPT is a great ultra-high-yield dividend stock that should have solid long-term growth prospects.