When a stock's dividend yield is 10% or more, it attracts attention. More often than not, it means something could be wrong with the underlying business -- or, at the very least, investors have significant concerns. Companies rarely raise their dividends high enough to produce that kind of yield based on the current stock price. An unusually high dividend yield suggests the share price has gone over a cliff.

That's what has happened with Medical Properties Trust (MPW 1.64%): The healthcare-focused real estate investment trust (REIT) is down 57% over the past 12 months, and is now trading at its lowest since 2009. With its dividend unchanged, the yield is now over 12%. Is it only a matter of time before there's a cut to the payout?

What does the earnings report say?

A good place for investors to start when evaluating a dividend is the earnings report. That can highlight how much money the company is making, whether it's generating enough in profit to sustain the payout, and if there are any alarm bells out there.

For the last three months of 2022, the company reported a net loss of $140.5 million, as a result of $283 million in real estate and other impairment charges it incurred for the period. After adjusting for that and other factors, the REIT reported normalized funds from operations (FFO) per share of $0.43. That's higher than the $0.29 that the company pays in quarterly dividends.

From a cash-flow perspective, however, the situation looks tighter:

A graph of Medical Properties Trust's quarterly free cash flow minus dividends, from 2018 through 2023
Data by YCharts.

The company generated just $7.1 million more in free cash flow than it paid out in dividends. That's below its five-year average. While it isn't a low, it's not a good sign, either.

Trouble collecting rent

Another area of concern is that Medical Properties is having problems with rent payments. On its earnings call last month, the company noted that Prospect Medical, one of its largest tenants, did not pay "full rent" for January and February. Management also wouldn't confirm if Prospect Medical paid any rent at all.

That's a troubling sign, and it's not the only tenant investors are worried about. Steward Health is another potential concern (although there was no word on the earnings call about whether it had trouble paying rent): It's Medical Properties' largest tenant, and last year had to enter into a credit agreement with its lenders.

When a REIT's earnings call is littered with questions and scenarios involving rent, that's simply not a good sign for investors.

Is a dividend cut coming?

In light of these recent results, the tighter financials, and the problematic rent payments, Medical Properties is a dividend stock that could end up cutting its dividend. I wouldn't assume that a cut is a given, as its payout still looks sustainable -- but there's not as much breathing room for the dividend as there used to be.

The REIT could hold out for longer and continue paying dividends. But with a significant tenant having problems paying rent, my concern is that the company could be one more troubled tenant away from needing to make a drastic decision.

Tread carefully with Medical Properties

This isn't a dividend stock investors should feel too comfortable with; there are too many red flags to ignore at this point. There are many safer dividend stocks to hold. Yes, Medical Properties' yield is currently high, but don't assume it will last.