It's smart to seek income from your investments. That's because income -- whether in the form of dividends or interest -- can serve not only retirees well, but also younger investors. When that income starts materializing regularly, those dividends can be reinvested in additional shares of stock, which will then start delivering dividend payments of their own.
NYSE: MPW
Key Data Points
The next question, then, is which dividend-paying stocks to invest in. Let's say you're looking for $500 in annual income. If you invested in a stock with a mere 2% dividend yield, you'd need to have $25,000 invested in it to reap $500.
If you'd like to collect $500 with a far smaller investment, check out Medical Properties Trust (MPW +4.00%). Its dividend recently yielded a whopping 14.8%! You'd only need an investment of $3,378 in order to collect $500 in dividends. There are a few things to think about, though. For example, know that when a stock's price falls, its dividend yield rises, and Medical Properties Trust's stock has fallen -- by about 25% over the past year.
So what's going on with the company? Well, it's a real estate investment trust (REIT), which is a kind of company that owns many properties and profits by renting them out. Many REITs specialize in certain kinds of properties, such as warehouses, apartments, or retailers, and this REIT's focus is medical properties.
The largest tenant of Medical Properties Trust recently filed for bankruptcy protection, which dealt the REIT a big blow -- and a lot of uncertainty. It remains to be seen what the future holds for Medical Properties Trust, but right now its valuation is quite low and its dividend quite high. If it can recover its momentum, it could reward aggressive, risk-tolerant investors.
