Boost Your Income with These Two Dividend Payers and Players
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On March 15, 2020, in a desperate attempt to relieve market stress caused by the ongoing coronavirus (COVID-19) outbreak, the Federal Open Market Committee and Fed Chairman Jerome Powell cut interest rates to 0%.
In the already yield-starved market, this is a devastating blow to the average investor.
There aren’t many areas of the economy left where you can find solid yields; the days when you could walk into your bank and earn 7% from a CD are long behind us.
You can’t fall back to the bond market now that interest rates are this low and unstable either.
If you want to make a meaningful return on your investment today without taking on a boatload of unnecessary risk, then you’re going to need to find alternative sources of income that can help you put your portfolio back on track.
One of the best ways to prepare yourself for this new zero-interest environment is to find the dividend payers and players that can have you cashing in monthly and quarterly checks that you can use to correct the course of your financial security.
Here in this report, we’ll share with you two best-in-class opportunities that will help investors like you find the income you need in these increasingly uncertain times…
Your Dividend Payer: Medical Properties Trust
It’s no big secret that real estate has been one of the top-performing asset classes for several decades, but even for well-heeled investors, the benefit of real estate investment trusts (REITs) is likely underrepresented in their portfolios.
It doesn’t matter if it’s a bull or a bear market, people will still need spaces to work, live, and shop – and all of those activities mean REITs will continue to collect rent.
This is especially true for REITs that specialize in the healthcare sector. In the short term, the industry is facing off with the emerging coronavirus crisis that has caused nearly all of the turmoil in the markets and pushed global medical capabilities to its limits.
Long term, you have baby boomers growing older, and as they do, the world’s largest age group will require increasingly more and diverse care as our ability to treat chronic conditions improves and life expectancy grows.
Medical Properties Trust Inc. (NYSE:MPW) is a top-notch medical REIT that sits right at the crossroads of those trends.
Headquartered in Birmingham, Alabama, MPW specializes in the type of medical facilities that will be at the point of the spear in the coming months as this pandemic continues to spread.
As of February 21, 2020, MPW’s portfolio consisted of 388 properties with an occupancy rate of 97%: 366 facilities are leased to 41 tenants, three are under development, 11 are mortgage loans to five operators, while only eight properties are not currently leased. MPW facilities operate approximately 41,000 licensed beds in 34 states in the U.S., in six countries in Europe, and across Australia.
Their business model facilitates acquisitions and recapitalization, and it allows operators of healthcare facilities to help unlock the value of their assets through funding facility improvements, technology upgrades, and other investments in operations.
MPW currently offers a solid 7.73% yield and has increased its dividend every year since 2013.
MPW focuses on acquiring and developing net-leased facilities as a way to target the latest trends, recruit the best staff, and develop the most critical components of the healthcare industry.
The REIT invests in facilities that have the highest intensity of care with three areas of emphasis: general acute care, longer-term care at inpatient rehabilitation facilities (IRFs), and long-term acute care hospitals (LTACHs).
Acute care facilities are what most people think of when they picture a hospital with shorter-term inpatient care as well as outpatient and emergency services. These hospitals and care centers will be the frontlines in the fight against COVID-19.
IRFs provide rehabilitation to patients with various neurological, musculoskeletal orthopedic, and other medical conditions.
LTACHs are specialty-care hospitals designed for patients with serious conditions that require intense, special treatment for an extended period of time, sometimes requiring a hospital stay averaging in excess of three weeks.
These are critical links in the healthcare ecosystem, and legislators at all levels will be pulling out all of the stops in order to keep the doors open.
Their acute facilities will likely be stretched to their limit, and trillions of dollars of government aid will be distributed to hospitals like these as this crisis wears on.
No area of care can afford to lose capacity while the disease threatens to overwhelm global healthcare infrastructure.
This prolonged, steady demand gives MPW’s business model long-term stability, giving the REIT a massive competitive advantage over other equities as it brings much needed stability and income production in an increasingly uncertain market.
Your Dividend Player: Visa Inc.
Our next dividend candidate is more of a dividend player than it is your traditional dividend payer.
This company represents a premium opportunity to step in front of a world-class business that is uniquely positioned to grow into a dividend champion, and the investors who are on board when that happens are going to be significantly rewarded.
Cash may be king, but its reign may be coming to an end more quickly than you might have imagined.
The world economy has become increasingly global – not only for big business, but also the individual consumer – and hard currency is taking a backseat to electronic transactions.
Electronic transactions offer a variety of advantages over cash.
To start, digital is more secure than cash, both financially and physically.
As we learn more about the spread of COVID-19, it has been discovered that it can live on surfaces like paper currency for several hours, meaning the bug can be transmitted to your hands by bills that have been handled by several people before you put them in your wallet.
If that weren’t evidence enough to make the case for transition to digital payments, think of the way it has completely transformed everyday experiences like buying gasoline or how it has marginalized the currency-exchange nightmare at banks and cashing traveler’s checks when you’re out of country.
Now, while transforming personal transactions is a serious market, there is a major frontier where digital exchange is truly beginning to innovate the economy and tap into an enormous stream of cash flow – business to business (B2B) payments.
According to the Association of Financial Professionals, as recently as 2016, a majority of businesses still used checks to pay for goods and services.
Only a handful of companies are poised to capture this emerging global trend, but there’s one that’s a cut above the rest due to its size and organization.
Visa Inc. (NYSE:V) is looking to step in to provide the next generation of e-commerce infrastructure those businesses need.
Visa is the largest credit card payment network in the world. With over 336 million cardholders and being accepted by over 40 million merchants worldwide, Visa has led the charge for cashless financial transactions since 1958.
In 2018, Visa cardholders accounted for 52.55% of all credit card purchases and 43.31% of all debit card purchases in the United States, and they have ambitious designs on areas that they’re targeting for growth.
That kind of market share has Visa well-positioned to capture any growth in the payment markets, and there’s still plenty of runway, even in North America.
In 2019, nearly 55% of all transactions under $10 in the U.S. are still conducted in cash, and estimates have checks and cash moving as much as $18 trillion in the U.S. in 2020.
Visa is also targeting expansion in its B2B payments network from 62 countries to over 100 in 2020 and is expecting to transition as much as $20 trillion of business transactions to its digital platform.
In spite of its age, Visa has been one of the most responsive and forward-looking companies, embracing technological changes in the payment space.
Visa has been aggressively courting startups, launching its Fintech Fast Track program in order to help ensure that no matter how money moves, Visa will be there to make it happen.
Fintech is transforming the way we move money. Whether it’s investment, money management, or simple personal transfers, over 70% of U.S. consumers used a fintech app in 2019.
Since 2018, Visa Fintech Fast Track has facilitated partnerships with apps like online financial planners, Betterment, and the digital bank Chime.
The company is also paying $5.3 billion to acquire Plaid, which connects a user’s bank account to financial apps such as Acorns and Venmo.
In addition to fintech acquisitions, Visa has it eyes on the emerging cryptocurrency market.
The payment behemoth was a charter member of the Facebook Inc. (NasdaqGS:FB) Libra Association but ultimately pulled its support back in October.
The company may have come of age before the digital revolution, but Visa is a well-established power player in the digital payment world that is constantly adapting and innovating to stay on top of its game and find new paths for growth. As the world moves away from cash, Visa has all of the resources in place to capture the lion’s share of that transition.
While the company currently yields a low 0.68% dividend, the company’s payout ratio is only 22X, or 16% of next year’s earnings.
That ratio is insanely low. What it means for us is that this is a company with plenty of cash to spend.
With numbers like that, all of the infrastructure behind it, and the tremendous new opportunities ahead of it, any decision to improve that ratio will give this stock the potential to grow into an amazing income-producing rock star for your portfolio.
What to Do Now
The savviest and most successful investors know that these are times for you to avoid risk.
These companies are as bulletproof as you’re going to come across with equities, given the dominating global trends of economic instability in the face of the coronavirus.
Zero interest rates are locked in for the long term, and frankly, we may never see them back to the levels we saw before the Great Recession.
With these two funds in your portfolio, you’ll be certain to generate the income necessary for you to stem the coming tides of economic uncertainty.
Until next time,
The Total Wealth Research Team