A Low-Risk Marijuana Play That Pays Dividends
I’m going to talk about something a bit different today…
Many of you are looking for the best and greatest income strategies to fund your retirements. You want safety and security.
You’re interested in protecting your wealth – and you’re likely investing for not just yourself but future generations.
I firmly believe that all investors should have a portfolio of dividend stocks.
But from decades of experience, I know the downside to dividend investing is that maintaining a good dividend investment is akin to watching paint dry.
I understand – you want safety… But you want big gains too.
So today, I’m going to reach into my goody bag to share something new.
In fact, it’s something I’ve shown to only a select group of investors. But it offers the compounding potential of a dividend reinvestment plan with soaring share price gains…
I’m talking cannabis dividend payers!
These are stocks that combine the best of both worlds: the high-flying potential of pot stocks and dividend income.
They’re part of what I call the “Reefer Retirement Plan.”
A New Market Is Born
At the top of my Reefer Retirement Plan list – even though its dividend yield isn’t the largest – is Innovative Industrial Properties (NYSE: IIPR). The company is a medical cannabis real estate investment trust (REIT).
Cannabis is one of the fastest-growing industries in the U.S. At the moment, 33 states and the District of Columbia have legalized medical marijuana.
As each new state ends prohibition of either medical or recreational cannabis, a new market is born. That means there are companies that need dedicated grow space, particularly highly sought-after greenhouse space that can be in operation year-round.
This is where Innovative Industrial Properties is far and away the industry leader. Its current portfolio includes 19 properties, representing 1.3 million square feet in 11 states.
But here’s the most important part: 100% of this space is leased with an average remaining lease term of 14.9 years.
These are long-term contracts where the REIT takes a hands-off approach. It works regular rent increases into its agreements and holds renters accountable for covering variable expenses.
As marijuana legalization has spread across the country, the company’s business has been booming. In the fourth quarter, Innovative Industrial’s revenue surged 111% to $4.7 million.
Despite the fact that the broader markets struggled under the weight of the U.S.-China trade tantrum, Innovative Industrial’s shares ended the week on a high note.
And that’s all thanks to its continued skyrocketing revenue!
For the first quarter, the cannabis REIT saw revenue surge 146% to $6.6 million.
And because it’s a REIT, the majority of that has to be returned to shareholders.
So here’s where it gets even better…
For the first quarter of 2019, Innovative Industrial announced its payout would be $0.45. That’s not only a 29% increase from the fourth quarter but an 80% increase year over year.
And we’ll be looking for that payout to increase again when the company announces its second quarter distribution.
As Innovative Industrial Properties continues to expand and grow its business, pushing its revenue higher, its dividend will only march higher. And right now, it offers a 2.2% dividend yield for $1.80 per share per year.
On top of that, shares have scorched the broader markets in 2019…
Innovative Industrial Properties shares are up 90% so far year to date!
That smokes the performances of the Dow Jones Industrial Average, Nasdaq, S&P 500 and SPDR S&P Dividend ETF (NYSE: SDY).
There is no sector of the market more exciting than cannabis. Over the next decade, it’ll skyrocket in size as new states – and new countries – legalize marijuana in some form or another.
The biggest gains will be seen by penny pot stocks. These will soar, turning small stakes into fortunes as the companies enjoy a meteorically high rise along with the industry.
But there are plenty of cannabis plays for income investors – like Innovative Industrial Properties.
These combine the best of both worlds.
Here’s to high returns,