Over the past couple of years, we have witnessed marijuana milestones that at one time never seemed possible.
To our north, Canada has become the first industrialized country in the world, and the second overall behind Uruguay, to legalize recreational pot. Meanwhile, in the U.S., two-thirds of all states have given the green light to medical marijuana, in some capacity. This support comes from a record percentage of Americans favoring broad-based legalization (66%), and an overwhelming number approving of medical marijuana prescriptions by a physician (93%).
Last year, we also witnessed the Food and Drug Administration approve its very first cannabis-derived drug, and President Trump signed the Farm Bill into law, thereby separating hemp plants from cannabis plants, by definition, and allowing the commercial production and processing of hemp nationwide.
But perhaps one of the craziest things to emerge over the past couple of years is…
Innovative Industrial Properties (NYSE:IIPR).
This marijuana stock is unlike anything we’ve seen before
Innovative Industrial is a marijuana-based real estate investment trust (REIT). What this means is that it acquires cannabis-related properties (mostly cultivation and processing facilities), then leases these facilities back to the proprietor for an extended period of time. As with any REIT, it’s trying to profit off the rental income it generates, then eventually sell the property for a gain — and potentially begin the cycle anew many years down the road.
Innovative Industrial first made history on Dec. 1, 2016, by debuting on the New York Stock Exchange (NYSE). While all the hoopla has gone to Canadian pot stocks uplisting from the over-the-counter exchange to the NYSE or Nasdaq, it’s actually IIP, as the company is also known, that beat every pure-play marijuana stock to a major U.S. exchange. Since REITs are considered financial companies, and IIP doesn’t come into direct contact with marijuana plants, it isn’t subject to the rules that have kept most marijuana stocks from listing on these reputable exchanges.
But not only did Innovative Industrial Properties beat other pure-play pot stocks to the listing punch, it’s also the only pure-play marijuana stock to pay out a regular quarterly dividend. The company has made eight quarterly dividend payments since July 2017, with three separate $0.10/quarter increases over that span, from an initial payout of $0.15 per share to $0.45 per share in April 2019.
Why pay a dividend? The simple answer is that it has to, based on its corporate structure. As a REIT, IIP avoids normal corporate income-tax rates. But in return, it must give back a majority of its earnings to investors in the form of a dividend. That’s why REITs often have such robust dividend yields.
Innovative Industrial Properties’ dividend should soar in 2020
Here’s the best part: IIP’s dividend looks like it could grow by approximately…
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