If you are purely an income investor, one of the factors you should always track is how much your dividends are growing over time in the stocks you hold. Even if the current stock prices are lower than your original purchase price, so long as you have no intention of selling and the dividend payments continue unabated, the purpose of your investments is still sound and you can be satisfied to continue holding the stocks.
It’s helpful to look back over a longer time frame to see how much you’ve made in dividends and compare your current yield with the yield received when you bought the stocks. Here is a look at one real estate investment trust (REIT) over the past five years and what it’s generating today compared to 2017.
Medical Properties Trust Inc. (NYSE: MPW) is a Birmingham, Alabama-based healthcare REIT that owns and operates 447 properties across 10 countries in the U.S., Europe and Australia.
According to its website, Medical Properties Trust invests in “acute care, rehabilitation, long-term acute care hospitals and other real estate facilities that generally require physician orders for admission.”
Medical Properties Trust stock pays its shareholders a quarterly dividend of $0.29. Five years ago, its stock was generating only $0.24 per quarter, so the dividend increase during that time has been 20.8%.
If you had invested $1,000 in Medical Properties Trust five years ago, you would have purchased 76 shares at a price of approximately $13.15. Over the five-year period, you would have received $5.33 in dividends, so with 76 shares, you would have received a total of $404.08 over that time.
The dividend yield you received in 2017 would have been 7.3%. But with Medical Properties Trust increasing the annual dividend from $0.96 to $1.16 in March, the yield on those dividends would now be lifted to 8.8%. That’s why it pays to purchase dividend stocks and hold them over the long term.
But what if instead of taking the dividends, you had reinvested them? In that case, you would now have approximately 102 shares of stock, paying out $118.32 per year in dividends. That would be an 11.8% yield on your original investment.
Medical Properties Trust stock is down about $2.50 per share over the past five years. At the beginning of 2022, it was near $23 but has declined over 50% this year. But with reinvesting the shares, you would still be up about 6% over that time. If you did not reinvest the shares, your total return would now be about 3.5%. But again, as income investors, the concern is always about dividends and the yield you receive, so with Medical Properties Trust you would still be profitable.
Today’s Real Estate Investment Insights
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