Shares of Reliance on medical properties (NYSE: MPW) rose 25.1% this week as of the market close on Thursday, according to data from S&P Global Market Intelligence. The big jump was due to two positive announcements from the company last week.
On Friday, April 12, Medical Properties Trust announced the sale of its interests in five Utah hospitals to a joint venture (JV) with an investment fund for approximately $1.1 billion. Medical Properties Trust owns approximately 25% of the JV. The same day, the healthcare real estate investment trust (REIT) announced its quarterly dividend of $0.15 per share – unchanged from the previous quarter.
Why investors liked the news from Medical Properties Trust
A large part of Medical Properties Trust’s value proposition to investors comes from its ultra-high dividend. Some investors were likely concerned that the REIT would cut its dividend payout for the second time in nine months. That did not happen, so shareholders could breathe a sigh of relief.
In fact, the sale of the Utah hospitals further strengthens Medical Properties Trust’s balance sheet. This deal was in addition to another sale announced April 9 of five facilities in California and New Jersey to Prime Healthcare for a total of $350 million. These transactions increase the likelihood that Medical Properties Trust can continue to pay its dividend at current levels.
Are Medical Properties Trust shares a buy now?
Medical Properties Trust’s latest updates likely give investors a reason to be cautiously optimistic about the company. However, the stock may remain highly volatile. Medical Properties Trust is not out of the woods yet. Most investors should avoid the stock for the time being. However, the healthcare REIT’s dividend yield of nearly 12.2%, combined with the potential for a continued recovery, could be tempting for aggressive investors.
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Keith Speights has positions in Medical Properties Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Confidence in Ultra-High Yield Medical Properties is Soaring This Week was originally published by The Motley Fool
