Why Medical Properties Trounced the Market Today

What happened

One of the standout stocks in the real estate investment trust (REIT) universe on Tuesday was Medical Properties Trust (MPW 5.92%). Buoyed by not one but two analyst price target hikes, the healthcare properties specialist saw its share price zoom nearly 6% higher on the day, a performance that left the S&P 500 index’s 0.2% skid in the dust.

So what

Before market open, both Credit Suisse prognosticator Tayo Okusanya and his peer Michael Lewis of Truist Securities got progressively more bullish on Medical Properties Trust. The former raised his price target to $13 per share from $11, while the latter bumped his to $14 (previous level: $13).

Although both analysts maintained their hold recommendations on the REIT’s stock while increasing their price targets only modestly, these twin moves illustrated the attractiveness of the company. 

Although it’s had its struggles over the years, as a landlord of hospitals it operates in a segment that isn’t subject to the whims of consumers (as is the case of most REITs, which focus on retail, office, or residential properties). It’s also a major operator at a time when the U.S. population is getting older as a whole, and as a country ages it requires more medical care (all things being equal).

It also pays a high-yield dividend, which at the moment tops 9%. That’s very good, even within the typically generous REIT space.

Now what

That dividend alone will probably maintain some degree of investor interest in Medical Properties Trust. It’s a fine play for anyone considering an investment into this busy segment, although there are larger REITs focusing on industries that either have more potential or are notably bigger in scale.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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