Yesterday I discussed a beaten down company that will survive and thrive after the COVID-19 crisis.
Medical Properties Trust (NYSE: MPW)— a real estate investment trust that owns acute care hospitals across the United States and Europe.
Why do I like them?
Because their tenants aren’t struggling to pay their rent.
They’re just not able to engage in high-margin surgeries during this outbreak – yet big pension funds and institutions unloaded shares like fools.
Good news. Their loss can become your gain.
Let’s dig deeper into this opportunity.
But before we do, let’s talk about a key investment secret you can apply to squeeze every dollar out of a firm like Medical Properties Trust as the U.S.economy recovers.
If you’re serious about building long-term wealth, this can boost your fortune.
Medical Properties Trust is based in Alabama.
But it has a massive reach around the world.
The firm is the only pure-play hospital REIT with facilities in the U.S., Australia, Germany, Great Britain, Portugal, Spain and Switzerland.
Every country on this list has become a hotspot for coronavirus, but the stock has pulled back sharply from its February highs.
The REIT is off 31% in six weeks. Honestly, this is an overreaction.
Its selloff has created the type of long-term opportunity that I’m looking for when I”m creating wealth for my children’s children.
Medical Properties Trust owns 389 medical buildings, community hospitals, and rehab clinics with about 41,000 beds around the world.
About 80% of its income comes from acute care hospitals – the ones treating coronavirus – that pay rent.
These hospitals pay rent because they sold their properties to Medical Properties Trust and then leased the space back.
This leading strategy provides hospitals with much better flexibility with their balance sheet, while MPW locks up the tenants in long-term leases…
And when I say long-term leases, I mean LONG-TERM.
Roughly 81% of its current tenants have agreed to leases that expire beyond the year 2030.
Ask yourself a simple question.
Do you really think that hospitals are going out of business in the United States in the next decade?
The Trust’s largest client is Steward Health Care System. It’s not important if you don’t know who they are – but this healthcare company has shifted most of its operations to treating coronavirus patients over the last two months. They are a leader in treatment during this crisis, but investors are writing off hospital systems because they can’t perform high margin surgeries.
This is really short-sighted given what is happening with the U.S. government.
Here’s what is so interesting about buying and holding this REIT.
The stock pays a dividend of 6.53%.
And – as you know – the cash it sends to investors comes directly from hospitals and clinics across the country.
These facilities have not shut down due to COVID-19.
In fact, they’re the facilities where there is constant demand. Congress has pledged unlimited working capital to hospital systems to prevent disruptions during the outbreak.
Hospital operators will receive $100 billion from the government and there could be more in the future. This means that the American taxpayer has effectively guaranteed the dividend of Medical Properties Trust.
So, when looking at your option, you can own this REIT and collect this dividend over the next year – or you can go to the U.S. bond market and get a one-year bond that pays 0.17%.
What sounds better: a 6.45% or a 0.17% return for your money in 12 months?
Long Term Investors Need This Strategy
There is obviously one caveat of buying the REIT for the dividend compared to the one-year Treasury bond.
Medical Properties Trust could go down in value.
Well, that’s where our wealth-compounding strategy comes in.
I’d be happy to see Medical Properties Trust stock decline because it would allow us to use a simple strategy known as dollar cost averaging.
It works like this.
Dollar-cost averaging is the process of spreading out your stock purchases to take advantage of changes in the price over time.
Rather than buying your entire position at once, you purchase shares at regular intervals and in roughly equal amounts.
Let’s say for example that you want to buy $6,000 in Medical Properties Trust.
Rather than buying everything today, you could break up your investment into 12 different stakes.
You would buy $500 in the stock on the first trading day of every month.
On April 1, you could have purchased 33 shares at $15.21.
On May 1, let’s hypothetically say that it sits at $15.50. You would purchase 32 shares at that level (around $500 in purchases).
In June, the market may pull back and maybe MPW trades at $12.50. You could purchase 40 shares at this level. In addition, you’d be able to lock up shares of this company at a higher dividend than today’s level.
So, does this strategy work?
Absolutely when we see very sharp pullback in the broader market and periods of uncertainty.
Coming out of a crisis, dollar-cost averaging has provided investors with much better returns in the long run.
I recently explained that if you invested $10,000 in November 2008, shortly after the collapse of Lehman Brothers, dollar cost averaging beat the lump-sum investment by a wide margin.
After 12 months, the lump sum investor would be worth $10.811.20.
But the dollar-cost averaging strategy would turn $10,000 into $11,566.74.
That’s a difference between an 8.1% return and a 15.66% annual gain.
We’ve seen similar returns following the Dot-Com bubble, the 1990 recession, and the 1987 crash from dollar cost averaging. I expect the same thing is going to happen again with the 2020 financial crisis.
Tonight, I am going to start showing readers how I plan to buy to build my family’s generational wealth.
You should know that I plan to use dollar-cost averaging and a handful of other strategies to boost my upside and to protect my principal over time.
Then, later this week, I’m going to show you how to make even more money during this recovery using one of my favorite ways to trade stocks and options…
This is another fun and totally different way to make money.
I’m introducing my long term buy-and-hold strategy tonight at 8 PM ET. If you haven’t registered yet, you still have time.