Dividend Showdown: IIPR vs. MPW

In the world of dividend stocks, two names have been making waves: Innovative Industrial Properties (IIPR) and Medical Properties Trust (MPW). Both companies have seen their fair share of ups and downs, but which one is the better beaten-down dividend stock to buy? Let's dive in and find out.

The Cannabis Connection: Innovative Industrial Properties

Innovative Industrial Properties is a real estate investment trust (REIT) that specializes in the acquisition, ownership, and management of specialized industrial properties leased to state-licensed operators for their regulated medical-use cannabis facilities. The company has a high dividend yield of 11.9%, which is well covered by earnings with a payout ratio of 93%. This high yield suggests that the company is generating sufficient cash flow to support its dividend payments, making it an attractive option for income-focused investors.

The company's dividend growth of 24.7% indicates that it has been increasing its dividends over time, which is a positive sign for long-term sustainability. The next dividend payment is scheduled for April 15, 2025, with an ex-dividend date of March 31, 2025. The company's recent updates, such as the declaration of dividends and buyback yields, indicate efforts to maintain stability, but the inherent volatility of the cannabis sector remains a risk.

The Healthcare Haven: Medical Properties Trust

Medical Properties Trust, on the other hand, is a self-advised REIT that acquires and develops net-leased hospital facilities. The company owns a large portfolio of hospital real estate, with 43,000 licensed beds in nine countries across three continents as of September 30, 2023. MPT's business model is focused on the healthcare sector, which is generally considered more stable and less volatile than the cannabis industry.

MPT has a dividend yield of 5.35%, which is lower compared to Innovative Industrial Properties. The dividend growth has been negative, with a year-over-year decrease of 47.30%. This negative growth rate suggests that the company has been reducing its dividend payments, which could be a concern for investors relying on dividend income. The lack of a payout ratio makes it difficult to assess the sustainability of the dividend payments.

The Debt Dilemma

Innovative Industrial Properties has a strong financial position with a dividend yield of 11.9%, which is well covered by earnings. The company has a payout ratio of 93%, indicating that it is distributing nearly all of its earnings as dividends. This high dividend yield and payout ratio suggest that the company is generating sufficient cash flow to support its dividend payments. The company's dividend growth rate is 24.7%, indicating a strong commitment to increasing shareholder returns over time.

Medical Properties Trust, on the other hand, has a more leveraged financial position. As of the latest data, Medical Properties Trust has a current ratio of 1.50 and a debt-to-equity ratio of 1.85. The company's debt-to-EBITDA ratio is 12.38, and its debt-to-FCF ratio is 36.37. These ratios indicate that the company has a high level of debt relative to its earnings and cash flow, which could present risks for investors.



The Bottom Line

In conclusion, Innovative Industrial Properties appears to have a more sustainable dividend policy with a higher yield and positive growth, making it a more attractive option for long-term investors seeking stable income. Medical Properties Trust, on the other hand, has a lower yield and negative growth, which could be a concern for investors relying on dividend income. However, both companies have strategies in place to mitigate risks and maintain financial stability, such as strategic asset sales and dividend payments. Ultimately, the choice between IIPR and MPW will depend on an investor's risk tolerance and investment goals.