Should You Forget Medical Properties Trust and Buy These Unstoppable Dividend Stocks Instead?

Medical Properties Trust (NYSE: MPW) has a lofty 7.2% yield. That compares to the S&P 500 index's skinny little 1.2% yield, and the average real estate investment trust's (REIT's) yield of around 4.1%. On the surface, it appears to be an obvious choice. But don't jump at the chance to buy Medical Properties Trust just yet.

You can get similarly large yields from healthcare REIT peers Omega Healthcare (NYSE: OHI) and LTC Properties (NYSE: LTC), and both offer a more compelling dividend story than Medical Properties. Here's what you need to know.

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Medical Properties Trust let investors down

Take a look at the chart below for Medical Properties Trust. The orange line is the quarterly dividend, and the purple line is the stock price. Notice the massive drop in both that has occurred since 2022. That was when some of the REIT's large tenants started to experience financial troubles. It was the start of a tense and complicated period when a small number of Medical Properties Trust's tenants failed, and it had no choice but to cut its dividend.

Data by YCharts.

For long-term dividend investors, the lofty 7.2% yield on offer from Medical Properties Trust comes with some lofty risks. It's possible that the bad news is all out, and the REIT can start to turn its business around. However, that's far from a certainty. Unless you're willing to bet that the future will look much brighter from here, most dividend investors will probably want to tread with caution. In fact, even if a turnaround is underway, it's likely to be a years-long process.

Image source: Getty Images.

Omega Healthcare and LTC Properties muddle through without a cut

There's a contrast to be made here with healthcare REITs Omega Healthcare and LTC Properties. Both of these REITs focus on senior housing, including nursing homes and assisted living facilities. During the coronavirus pandemic's height, both of these property types were hard hit. The reason was pretty simple: COVID-19 is particularly deadly for unvaccinated older adults and spreads easily in group settings. Occupancy fell for both REITs, and there was a drought of new customers.

Data by YCharts.

Both Omega and LTC also had to deal with tenant problems, as some of their lessees had trouble paying rent. That would seem like a perfect storm that would lead to a dividend cut. Yet neither Omega nor LTC cut their dividends. To be fair, neither of these REITs has increased their dividends in years. But a static dividend is much better than a dividend cut. Right now, Omega's yield is 7.4%, while more diversified LTC Properties has a 6.5% yield.

The future is starting to look brighter for each of these healthcare REITs. Omega's adjusted funds from operations (FFO) rose year over year in the first quarter of 2025, and it increased its full-year guidance. LTC Properties, meanwhile, expects 2025's adjusted FFO per share to be flat to slightly higher. However, it's diversifying its business approach to include senior housing operating properties (SHOP). (SHOP assets are owned and operated by the REIT, though it actually hires a third party to handle day-to-day management of the asset.) As it grows, this business should increasingly benefit from the growth in demand for senior housing as the U.S. population ages.

Choose your dividend risks wisely

The key takeaway here, however, is that, when faced with adversity, Omega and LTC Properties held firm in their commitment to shareholders. They adjusted as needed to keep paying. Medical Properties Trust, on the other hand, couldn't manage that feat. The past doesn't predict the future, of course, but the past is all we have to go on as investors. And since all three of these healthcare REITs have faced material adversity just recently, their strengths and weaknesses have been laid bare.

While the worst might be over for Medical Properties Trust, most dividend investors should probably err on the side of caution with either Omega, which has a higher yield, or LTC Properties, which has a lower yield but a far more diversified business model.

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Reuben Gregg Brewer 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.