This year, the bear market bludgeoned shares of Medical Properties Trust (MPW -2.54%). The hospital owner's stock price has plummeted 45%, partly due to the impact that rising interest rates could have on its ability to expand. The sell-off has driven the dividend yield of this real estate investment trust (REIT) up over 10%. 

double-digit dividend yield usually signals that the market doesn't believe it's sustainable. However, the healthcare REIT's financial results suggest it's more than healthy enough to sustain its ultra-high-yielding dividend. Because of that, it looks like an enticing option for those seeking a big-time passive income stream.

Another healthy checkup

While the stock has been under pressure this year, the underlying business continues to perform well. That was evident in its third-quarter results. The healthcare REIT reported $0.36 per share of adjusted funds from operations (FFO), a 6% year-over-year increase. That pushed its year-to-date total to $1.08 per share, up 7% year over year.

The company has benefited from acquisitions completed over the past year and rising rental rates. Many of its leases feature inflation-linked rent escalations. With inflation running hot, rents are rising faster than the historical pace. It sees its rents growing 4% to 5% over the next year, which should further boost its FFO. 

Medical Properties Trust also has a healthy balance sheet. It ended the period with a 5.8 leverage ratio, which is solid for a REIT. It has investment-grade credit from one rating agency, while another has it one notch below investment grade. The company primarily has long-term fixed-rate debt (91% of its $9.5 billion in debt has a fixed rate) with limited near-term maturities (only 4.7% of its debt matures next year and another 8.1% in 2024). This capital structure helps insulate it from the impact of rising interest rates.

Getting even stronger by the move

Even though it already has a healthy financial profile, Medical Properties Trust has taken several steps to put it in even better shape. It sold 11 hospitals in the third quarter and received repayment on several loans it made to hospital operators. It also closed a joint-venture transaction earlier in the year. Those deals enabled the company to bring in $1.8 billion of cash from its capital recycling program this year. This cash infusion has allowed the REIT to make several acquisitions. It also paid down short-term debt, giving it the financial flexibility to pursue other accretive acquisitions as opportunities emerge. 

Meanwhile, it has two other transactions in the pipeline that will close in early 2023. It expects to receive a $200 million loan repayment and has agreed to sell three more hospitals for $457 million. The company could use that cash to reduce debt, repurchase its beaten-down stock, or make accretive investments. 

The dividend looks healthy

With its FFO continuing to grow, Medical Properties Trust isn't having trouble covering its big-time dividend. The company's dividend payout ratio was 81% of its adjusted FFO in the third quarter, a healthy level for a REIT. That gave it some cushion while allowing it to retain earnings to enhance its financial flexibility. 

Meanwhile, an improving balance sheet only adds to its ability to sustain the dividend. With limited near-term debt maturities and primarily fixed-rate debt, it's not feeling much pressure from rising interest rates. Because of that, it has the flexibility to continue expanding its hospital portfolio as accretive opportunities emerge.

The sell-off seems overblown

Shares of Medical Properties Trust have cratered this year, driven down by market worries over the impact of interest rates on its operations and its ability to maintain the dividend. But the REIT has navigated those headwinds admirably by selling some noncore assets to enhance its financial profile.

Because of that, its big-time dividend looks healthy, making it seem like an attractive option for those seeking a lucrative passive income stream.