Summary
I am buying up as many shares as I can of these two excellent opportunities.
The time frame is short before investors crowd the trade and the upside is gone.
We need to be strategic about buying our income for 2022.
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The concept of doing something “hand over fist” is illustrative of doing something as quickly as possible, rapidly reaching with one hand as the other hand pulls in what you grabbed. It’s very fun imagery, especially when thinking of money.
Many High Dividend Opportunities members make income hand over fist due to our high yields and large income portfolios. We don’t collect money once or twice a month but throughout them. Every month, we collect dividends from dozens of different companies. The next deposit is rarely more than a few days away. Even as we plan what to do with one dividend, another is on the way!
A common misconception is that a fully invested dividend investor cannot capitalize on dips and short-lived opportunities. Nothing could be farther from the truth.
I have plenty of cash to take advantage of deals. My cash flows rapidly, and I am not stuck to only buying on the 15th or 30th of every month. While some payment dates are more popular than others, in January, I will be paid on the 3rd, 5th, 11th, 14th, 19th, 24th, 27th, and the 31st. Out of the 20 days the stock market is open in January, I will be paid on 8 of them!
As I’m raking in my dividends hand over fist, I’m actively looking for opportunities to put them to work. When the market turns red, I’m ready because I recently got paid or will be paid soon.
Today I want to share two great dividend picks that are trading at attractive prices and will be on my radar as I collect my dividends. The big plus? These picks are growing their dividends in 2022, so the income I receive today will be even higher in the future. With rent payments having an inflation escalator, I can expect large dividend increases from them. Win-win!
Let’s dive in! Pick #1: MPW – Yield 5.1%
Are you looking for a pick that will: Benefit from current low interest rates.
Benefit from rising inflation.
Has built-in revenue growth.
Will have dividend growth.
Look no further than Medical Properties Trust (NYSE: MPW ). MPW is a property REIT that invests in hospitals and then leases them to tenants on a “triple-net” basis. The “triple-net” lease means that the property level expenses like taxes, insurance, and daily maintenance are the tenant’s responsibility.
In the real estate world, debt is usually used to fuel growth. Lenders look upon real estate very favorably as a physical asset that generally appreciates in value in most economic environments.When interest rates are very low, it creates opportunities to refinance. This is what MPW is doing, recently refinancing 4.0% unsecured notes with a new €500M note with a coupon of just 0.993%. As long as interest rates remain low, either in the U.S. or in Europe, MPW will have opportunities to refinance at lower rates, directly benefiting cash flow.In our macro-outlook, we see the developing situation where inflation is high, and Treasury yields are low. This is the “perfect storm” for MPW, which provides an opportunity to reduce interest costs through refinancing while revenue rises due to built-in inflation escalators. 90% of MPW’s leases have escalators that increase rent based on inflation. The higher CPI is, the higher the rent MPW collects! While MPW’s revenue will increase with inflation, MPW’s expenses are insulated from inflation with interest being the largest single expense. Remember, the tenant pays the property-level expenses, which are likely to be impacted by inflation! MPW’s expenses include interest, which depends on treasury rates, and G&A, which is less than 10% of revenues and a large portion is share-based compensation. In other words, inflation has a large impact on revenues, but only a very diluted impact on expenses! MPW’s AFFO (Adjusted Funds From Operations) is up 12% year-over-year as it has built-in growth for another 10-15% increase next year even before accounting for rent growth from inflation and future acquisitions.Since 2013, MPW has increased its dividend by 40%. The timing of its raises has been inconsistent, sometimes coming in Q1, other times in Q3 […]
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