During these unpredictable times, dividend stocks can provide consistent income to smooth over the bumps in the road. If you’re in the market for stocks representing well-known businesses that pay regular dividends, two choices to consider are Medical Properties Trust (NYSE:MPW) and Dominion Energy (NYSE:D | D Price Prediction).
Passive income dividend stocks like MPW and D can help you build wealth over time, especially if you reinvest the cash distributions into more shares. Therefore, to potentially maximize your gains, it may be tempting to load up on whatever stock offers the highest dividend yield.
On the other hand, a higher yield doesn’t always mean it’s a better stock to buy now. Always remember that you’re investing in a business — and between Medical Properties Trust and Dominion Energy, one business appears to be on firmer fundamental ground than the other.
Which One Pays a Higher Yield?
If you only look at the forward annual dividend yields, I must admit that there’s a clear winner here. Medical Properties Trust and Dominion Energy both pay hefty dividends, but one of them is more generous on a percentage basis.
Medical Properties Trust, a real estate investment trust (REIT) that owns hundreds of hospitals, offers a whopping 6% annual dividend yield. Meanwhile, utilities giant Dominion Energy provides an annual dividend yield of around 5%.
Thus, percentage-wise, Medical Properties Trust features a 20% greater dividend yield than Dominion Energy. It’s a difference that can definitely add up over time, especially when the returns are compounded through dividend reinvestment.
That said, I don’t want you to be a yield chaser. After all, a the benefits of a higher dividend yield can get wiped out if the share price falls fast.
These two stocks represent a textbook example. Here’s a five-year chart of Medical Properties Trust stock:
And here’s a five-year chart of Dominion Energy stock:
During the past five years, MPW stock fell around 63% while D stock declined approximately 31%. Hence, even if Medical Properties Trust may have paid a superior dividend yield, this wouldn’t have made up for the comparatively poor share-price performance.
Financials: The Bottom Line
Sometimes, commentators refer to a company’s net profit or loss as the “bottom line.” If a business’s income is significantly exceeds its expenditures, that’s probably a good sign.
As important as Medical Properties Trust’s superior dividend yield may be to income investors, we can’t afford to overlook the “bottom line.” With that in mind, let’s compare the net profits/losses of Medical Properties Trust and Dominion Energy.
For the full year of 2024, Medical Properties Trust reported a net loss of $2.4 billion. That’s much deeper than the company’s net loss of $556 million in 2023.
Turning to Dominion Energy, the company reported net income of $2.214 billion for 2024. This is a moderate improvement over Dominion Energy’s $2.031 billion net income from 2023.
To put it another way, Medical Properties Trust is a money-losing operation and this issue only got worse from 2023 to 2024. In contrast, Dominion Energy is highly profitable business that’s actually improving in that regard.
This is relevant because it’s more difficult for a money-losing operation to maintain its dividend yield, especially if it’s a high yield like what Medical Properties Trust offers. I’m not suggesting that a dividend cut is imminent for Medical Properties Trust, but given the two companies’ comparative “bottom lines,” I feel that Dominion Energy’s is more secure in 2025.
A Safer Stock to Withstand Uncertainty
In case you didn’t get the memo, “uncertainty” is the buzzword in the financial media nowadays. There’s just no telling what the state of the economy will be in a month, not to mention the rest of the year.
For this exact reason, utilities stocks like D stock will appeal to safety-focused investors, including retirees. Throughout the economy’s ups and downs, people will continue to continue to run their air conditioners in the summer and their heaters during the winter.
So, Dominion Energy should remain on fairly solid financial footing even if the broader economy falters for a while. Now, you might make the same assumption about Medical Properties Trust since it’s a company in the medical field and people will always need medical care.
That’s undeniable, but Medical Properties Trust is also in the real estate field. This could be problematic because real estate values are highly sensitive to gyrations in the economy.
The point is that Medical Properties Trust’s already rough financials could deteriorate rapidly during an economic decline. Then, it’s not inconceivable that Medical Properties Trust may end up cutting its dividend.
In the end, don’t hastily choose MPW stock over D stock just because one currently has a bigger yield. Weigh all of the relevant factors, and surely you’ll agree that Dominion Energy stock is the better choice to weather whatever economic changes may come.
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