At the risk of stating the obvious, the U.S. marijuana industry has evolved at a breakneck pace. So much so, that several companies in the business even pay dividends — typically a feature of a company or industry that has been active and successful for years.
These three associated marijuana stocks aren’t the traditional growers and distributors in the industry. On top of that distinction, they not only pay dividends but also have increased them over time. Read on for more about a trio of companies distributing the good stuff in the form of euphoria-inducing greenbacks…
Innovative Industrial Properties
Innovative Industrial Properties (NYSE:IIPR) is a real estate investment trust (REIT) specializing in the industrial and greenhouse infrastructure that weed producers need for their business.
All of its clients are state-licensed growers of medical cannabis. These entities typically rent the REIT’s properties on 10- to 20-year terms, with annual base rent increases of 3% to 4.5% baked into their contracts.
The company is profitable and growing; in its latest reported quarter, it booked rental revenue of roughly $6.6 million, for weedlike growth of nearly 150% year over year. Adjusted funds from operations — a more important profitability metric for REITs than net income — more than tripled, to just over $5 million ($0.54 per diluted share).
Operating in a hot segment of the economy, Innovative Industrial Properties plans to keep catching the fire. It wants to dramatically increase its footprint, although there are potential pitfalls to such a strategy.
Nevertheless, the company is a champion weed dividend payer. In its short lifespan, it has raised its quarterly distribution four times, most recently boosting it from $0.45 per share to $0.60. At the current stock price, this yields slightly over 2%.
There’s something to be said for the pick-and-shovel method of investing — i.e., putting money in companies that sell the goods and services needed to make popular products. Scotts Miracle-Gro (NYSE:SMG) is a pick-and-shovel play in the marijuana sector; its Hawthorne Gardening subsidiary manufactures and sells the equipment required to grow weed.
The company is a real veteran on the grow-and-cultivate scene; it’s effectively been selling its wares since just after the Civil War. It made a decisive move into the marijuana sector earlier this decade with the founding of Hawthorne Gardening, which these days accounts for 13% of annual revenue.
So weed isn’t Scotts’ main customer sector, but it’s helping the company grow its fundamentals and will probably continue to. Analysts who track the company are collectively anticipating a 17% increase in net profitability this fiscal year, on the back of 14% improvement in revenue.
It has paid a quarterly distribution steadily and consistently since 2005, and since 2010 it has declared a raise every summer — so a new one should be coming through the hydroponic tubing soon. The last payout amounted to $0.55 per share, for a yield of 2.2%…
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