A recommendation downgrade from a prominent bank was one factor limiting the share price rise of Medical Properties Trust (MPW -1.10%) on Monday. Although the stock advanced during the trading session, its 0.6% increase was outpaced by the S&P 500 index's gain of more than 1%.
An analyst now says Medical Properties Trust is a sell
The bank in question was Wells Fargo, whose analyst Connor Siversky changed his recommendation on Medical Properties Trust to underweight (sell) from his previous rating of equal weight (hold). Siversky also cut his price target on the stock rather drastically to $4 per share from his prior target of $9 per share.
The specific drivers behind the analyst's move weren't immediately apparent. Regardless, it was yet another blow for Medical Properties Trust stock in a year that has seen it take plenty of hits.
The company, which is a real estate investment trust (REIT) specializing in hospitals and other medical facilities, has stumbled lately. Higher interest rates are dampening the performance of REITs generally, and Medical Properties Trust has suffered accordingly. In an attempt to improve its finances, the company cut its dividend nearly in half in August.
The dividend cut made bears of many investors
While dividends matter to most stock investors, they really matter to folks who own REITs.
In order to maintain their status as REITs, companies like Medical Properties Trust are required to pay out at least 90% of their net profits every year to shareholders in the form of dividends. That's the key reason why REIT yields are typically higher than those of other stocks. In the wake of that deep cut to its dividend, it's no wonder Medical Properties Trust hasn't been a top choice of REIT investors lately.
