Investing in stocks is something I like to do on a long-term basis. As such, I'm generally willing to be patient when a company whose shares I own is going through some rocky times.

In fact, my strategy is centered on building a diverse portfolio of quality stocks. And I also enjoy holding stocks that pay generous dividends.

Because REITs, or real estate investment trusts, often fit the bill, I own a number of them. I like owning REITs not just for the higher dividends, but for the fact that they allow me to invest in real estate without having to actually own properties or become a landlord.

Recently, I thought about buying more shares of Medical Properties Trust (MPW 2.65%). One of the things I've always liked about it is that its portfolio is loaded with healthcare facilities. And since there will always be demand for those, I see it as a recession-proof investment.

But another nice thing about Medical Properties Trust is the dividend it pays, which these days is creeping toward the 15% mark. I was about to scoop up more shares to capitalize on that dividend when I decided to do a little digging. And in the end, I'm glad I hit pause on the decision to buy.

It's not the best time for this particular stock.

Medical Properties Trust is down about 52% over the past year and 33% over the past five years. And the company's income for the first quarter of 2023 was $33 million ($0.05 per diluted share), a notable drop from $632 million ($1.05 per diluted share) during the same quarter a year prior.

I still think Medical Properties Trust is a solid business, but I don't love the way its share price and income have fallen. And I don't think buying more shares is the right move for me right now.

I'm also not super confident that the company will be able to continue paying its current dividend, even though it expressed that very intent in its most recent earnings call. I'd rather put my money into another REIT whose income looks a little more stable and whose share price hasn't been tanking.

An important lesson learned

There's absolutely nothing wrong with investing in businesses that are financially strong but also happen to pay a generous dividend. But when I initially set out to buy more shares of Medical Properties Trust, I was really only thinking about that dividend.

A much better bet is to look at the big picture. A large dividend is not always an indication that a company is enjoying success. Sometimes, it can signify that the business in question isn't reinvesting enough.

Now REITs are a little unique in that they're required to pay at least 90% of their taxable income to shareholders. But a decline in income could easily lead to a lower dividend for Medical Properties Trust down the line.

All told, I'm glad I took the time to think things through before buying shares based on dividends alone. And you can bet I'll be taking a closer look at my dividend-paying stocks to make sure all of them truly deserve a place in my portfolio.