Do you know the company that owns the building where your local hospital operates? Probably not, but there's a chance that it's one of the holdings of Medical Properties Trust (MPW -0.66%), because it owns and leases quite a few such spaces as part of its business.

Medical Properties Trust isn't a stock that's right for all investors, though. In fact, it's a pretty bad option for a certain kind of buyer, even if others might flourish while collecting the dividends it pays out.

To figure out which camp you might fall into, let's take a look at the bull case and the bear case for this stock. 

The bulls know that hospitals are never going out of style

At the core of the bull thesis for Medical Properties Trust is that people are always going to need healthcare, whether it's at a hospital or a clinical space. That makes the company's hoarding and rental of those spaces all the more valuable as time goes by. Right now, its collection of general acute care hospitals is worth around $14.8 billion in assets, and renting out those spaces is how it generated net income of $222 million in third-quarter 2022.

And with more than $299 million in cash and equivalents, MPT has plenty of resources it can use to purchase additional real estate. That should allow it to keep growing its base of revenue, which in turn should enable it to keep hiking its dividend in turn. At the moment, its forward dividend yield of 9% is quite sizable. 

Maintaining the dividend is plausible because the company will likely always have a few modestly strong long-term tailwinds in its favor: population growth, longer lifespans, and growth in the number of medical visits and procedures. Over the last 10 years, the U.S. population rose by around 6.5%, and more people means that there's more demand for hospital beds and procedure rooms. At the same time, people are living longer, so they use more hospital and clinical resources than in prior eras.

Likewise, the advance of medical science over time leads to the development of more medical interventions, and administering those interventions takes up space. The number of procedures per person per lifetime is rising too. So the combination of more patients seeking care and then actually getting more care than they might have gotten historically will gradually create more demand that the tenants of this real estate investment trust (REIT) will need to handle by expanding their facilities.

Bears see the economic headwinds swirling 

Per the bears, there are two main problems with this stock. Problem one is that it needs to finance most of its purchase of new properties using debt, and the cost of taking out new debt is rising thanks to the Federal Reserve's mission to tame inflation.

Therefore, when the debts the business takes out in the near future start to come due, it'll be on the hook for repayment at higher interest rates, which will leave less money left over for distributions to shareholders or saving for future growth. That doesn't mean MPT will crash and burn -- it only means that its rate of expansion is likely to slow down, because the fuel for it (cash) is harder to come by. 

The second problem is that MPT's growth hasn't been exactly snappy in recent years, so the upcoming slowdown could reduce it to a crawl, precisely when the economic conditions will be ripe for its tenants defaulting because of a potential recession.

For reference, its quarterly revenue actually declined by 8.6% year-over-year per its earnings report for the third quarter of 2022, though the cause for that was the sale of some of its properties. It sold those locations to pay off some of its debt load, which is currently at nearly $9.5 billion. Its level of indebtedness is yet another reason to believe that any fresh loans will be issued at less favorable rates. 

Probably not the best investment you can find 

Over the last 10 years, the total return on MPT's shares was 80.2% versus the market's return of 221.6%. That shouldn't bother investors who are interested in it for the passive income that it can provide. But for almost everyone else, it's a red flag when paired with the anticipation of slower growth or even a shrinking top line. 

Therefore, unless you're a dividend investor willing to take on a bit of risk, you can likely park your money somewhere else and have it grow faster.