This mega-dividend stock set to benefit from $1 billion deal

This mega-dividend stock set to benefit from $1 billion deal

Medical Properties Trust (NYSE: MPW) has faced significant challenges in recent years, including financial pressures from its top two tenants and rising interest rates, making borrowing more expensive.

These factors have led to a decline in its stock price, resulting in a high dividend yield of over 12%.

Despite these obstacles, the healthcare REITs outlook is improving. Medical Properties Trust has taken measures to enhance its liquidity, enabling MPW to declare its next dividend payment.

MPW stock annual dividend yield.

While Medical Properties Trust still has a journey ahead to regain stability, it is showing promising signs of progress in strengthening its financial position.

Deal worth over $1 billion could bolster recovery

Medical Properties Trust has made significant moves to enhance its financial position recently. It agreed to sell a 75% stake in five Utah hospitals to a new joint venture with an investment fund for $886 million while retaining a 25% interest.

With additional financing secured by the joint venture, the total cash received amounted to nearly $1.1 billion. This influx of cash will be used to reduce the REITs outstanding debt, including paying off a $300 million Australian term loan and a portion of its revolving credit facility.

Additionally, the REIT closed the sale of five facilities in California and New Jersey to Prime Healthcare for $350 million, further boosting its liquidity. Overall, these transactions have provided the REIT with approximately $1.6 billion in additional liquidity this year, achieving 80% of its initial 2024 target of $2 billion.

MPW stock price chart

Medical Properties Trust is on track to surpass its liquidity target for the year, having already achieved 80% of it. With potential upside from tenants‘ increased rental payments and potential sales of managed care businesses, the REIT’s stock price could see a significant recovery. This progress strengthens the foundation of its dividend and enhances shareholder value.

Looking at the YTD chart showcases a 6.32% decrease in MPW stock price, putting its valuation at $4.74, a long way off its all-time high of $24.15, achieved 4 years ago.

However, if Medical Properties Trust manages to pull off its liquidity goal, bolstered by increasing rents from its tenants, then MPW shares might prove a great investment option in the long run.