Why Marijuana is Good News for Innovative Industrial Properties Inc (NYSE: IIPR) Stock
Innovative Industrial Properties, Inc. (NYSE:IIPR) is a real estate investment trust (REIT) Maryland corporation focused on the acquisition, ownership, and management of properties leased to state-licensed operators for their regulated medical-use cannabis facilities. It is focused on leasing its properties where the tenant is responsible for all aspects of and costs related to the property and its operation during the lease term, including maintenance, taxes and insurance and IIPR merely collects extremely high margin rent.
Cannabis, both medical and recreational, has become one of the fastest growing industries in the US as well as Canada. One could say 2018 was a turning point for marijuana stocks. Canada legalized marijuana for recreational use and the Mexican supreme court paved the way for recreational use by adults. Moreover, Michigan became the 10th U.S. state to legalize marijuana, while Missouri and Utah will allow for medical marijuana.
This is all good news for Innovative Industrial Properties (NYSE:IIPR) and is key to IIPR’s strong long-term cash flow and thus dividend growth in this very niche market in which it operates. Ultimately Innovative Industrial Properties is the lowest risk way to make a high-risk/high-reward gamble on the future of US cannabis. Innovative industrial has been around for nearly two years, and in that time has grown its portfolio from one property to nine and pays a dividend yield of 3.05%. This is not your typical REIT investment, however, we believe they are a great candidate to add to The Hade Platform Income Dividend Portfolio.
Stocks that pay sizable, regular dividends usually trade in the market with less volatility than stocks that don’t pay dividends. The stock market has been extremely volatile lately and investors prefer companies that pay dividends to extreme volatility. Of course, this is not a hard and fast rule, but on average it holds true.
For instance, in 2008 as the S&P lost 35% of its value, dividends paid out by companies actually increased. Over the past 58 years, dividends have grown at a compounded annual rate of 5.8%. The market tends to be less likely to drive down the share prices of stocks that pay high dividends than those of companies that pay no dividends. Moreover, dividend investors don’t have to face the difficult choice of deciding when to buy and sell stocks near as much since their portfolio generates income from dividend payments.