Medical Properties Trust: 7.8% dividend and $4 a share. Rescue or yield trap?

Medical Properties Trust is one of the most talked about REITs of recent years. After plummeting from more than $20 to the current $4, the stock seems to be attracting investors mainly because of its extremely high dividend yield approaching 8%. The portfolio of nearly 400 hospitals and medical facilities around the world looks stable at first glance, but high debt, underperformance and doubts about the quality of tenants raise questions: Is this an opportunity for the bold or a textbook dividend value trap?

Top points of analysis:

• Dividend yield ~7.8% at the current price of around $4.

• A portfolio of 392 healthcare facilities with over 39,000 beds in 9 countries.

• Strong revenue growth from new leases - e.g. quarterly growth from 3.4 to 11 million. USD 4.5 MILLION.

• Active refinancing - e.g. JV loan of €702.5m for 10 years at a fixed rate of 5.1%.

• Performance issues - NFFO down from $0.23 to $0.14/share; quarterly net loss of $0.16/share.

• High debt - Debt/equity around 200%, downgrade risk.

• Con…