From a high-level view, Medical Properties Trust (MPT +4.54%) has an attractive focus. The real estate investment trust (REIT) owns vital medical facilities, like hospitals. However, the REIT ran into trouble not too long ago when it lacked the financial flexibility to handle tenants who couldn't pay their rent. There were very real concerns that the stock could head to zero.
Medical Properties Trust has muddled through
At this point, however, the healthcare REIT appears to have worked through the worst of its problems. It wasn't pretty. The effort required two dividend cuts because the original turnaround plan wasn't sufficient. And it required selling assets, some at a loss, and writing off rents that were uncollectible.
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There were concerns on Wall Street that the REIT's troubled tenants would take it down a path from which it couldn't recover. There's a reason why the stock is down roughly 75% from its 2022 highs. But, at this point, it does not look like Medical Properties Trust's stock is heading to zero. In fact, it is starting to turn its business around.
The biggest indication of that was the late 2025 dividend increase of 12.5%. That sounds really big, but it amounts to a penny a share, since the quarterly dividend went from $0.08 to $0.09 per share. The REIT also announced a $150 million stock buyback plan. All in, however, the takeaway is that Medical Properties Trust is making a statement that the future is looking brighter.
NYSE: MPT
Key Data Points
That, however, doesn't mean that this healthcare REIT is a great option for risk-averse investors. The dividend yield is nearly 6%, which is more than two percentage points above the REIT average of 3.8%. However, there are other healthcare REITs with attractive yields that have worked through difficult times without cutting their dividends, such as senior housing landlord Omega Healthcare Investors (OHI +1.67%). Omega's yield is only slightly lower at 5.7%.
You can find better REITs
If you like turnaround stories, then you might find Medical Properties Trust of interest. At this point, the REIT appears to have stabilized its business. However, for more conservative income investors, the two dividend cuts are a sign that management failed to deliver on earlier turnaround promises. It is reasonable if you see that and have trust issues. If that's the case, buying a different REIT or waiting until Medical Property Trust's turnaround is a bit further along would make a lot of sense.
