Cannabis stocks are some of the hottest growth stocks on the market as the wave of legalization washes from state to state and country to country.
But the newness of the industry and the complicated legal status – cannabis is still illegal at the U.S. federal level despite 11 states fully legalizing it – means finding marijuana stocks that pay dividends can be nearly impossible.
But one of our favorite cannabis stocks does pay a dividend, and as you’ll see below, the stock’s chart shows right now is the perfect time to buy.
One of Money Morning Director of Cannabis Investing Research Greg Miller’s favorite cannabis stocks with dividends is Innovative Industrial Properties Inc. (NYSE: IIPR). This a real estate investment trust (REIT) that owns the real estate needed for cannabis companies to do business but does not touch the plant itself.
Innovative buys the cannabis facilities from the companies that build them and leases those facilities back at a handsome premium. Innovative gets above-market rents, and the companies get the cash they need to grow their cannabis business.
THREE STOCKS: Any one of these cannabis companies could potentially deliver a 1,000% windfall. Click here to learn more…
That’s made IIPR one of the best marijuana stocks on the market, even though the company doesn’t make or sell the products. The market certainly got excited over the stock, and investors piled in earlier this year. And why not? The company was doing great.
But that’s not the whole story.
By digging into the technical indicators, we’re seeing signs this marijuana dividend stock is sitting at the perfect buying level. Once you see the chart below, you’ll see it has nearly 100% growth potential on top of a hearty 3.7% dividend yield…
Why This Cannabis Dividend Stock Is a Buy Today
While Innovative Industrial Properties got off to a hot start this year, it ran into some turbulence recently.
Back in July, the stock started to pull back as Innovative Industrial Properties’ leadership announced a secondary public offering of 1.3 million shares at $126 each. The offering is worth some $164 million, but $126 was well below the $137 value of available shares at the time of the announcement.
Management had a solid plan for the $164 million in fresh blood. In fact, Innovative is going to continue to do the same things that drove its stock price through the roof in the first place: It’s going to acquire more industrial real estate to lease to more licensed cannabis operations.
We saw that as just an excuse for savvy investors to cash in some of their massive gains and wait for the next buying opportunity.
In fact, the technical condition of the stock right now shows a healthy correction nearing its conclusion. After falling from a high of $137.62, the stock is now near what appears to be a value area just above $91 per share.
As you can see in the chart below, current trading is taking place on a long-term rising trend line and at support from earlier this year. We like to call that “riding the rail.” That also means we expect investors to see the value created by the correction and start to get back in, pushing shares even higher.
Make no mistake: The recent pullback is a prime time to buy and will help you lock in a dividend yield of 3.37%, nearly double what the S&P 500’s offering right now.
Just this month, the company announced a third-quarter common stock dividend increase of 30% from previous quarter and 123% increase from the same quarter a year ago. It now sits at a beefy yield of 3.4%.
The average analyst price target is $164 per share, which is a 79% gain from current trading levels. But analysts at Compass Point Research predict the stock could reach $177 a share by this time next year, a nearly 100% gain.
That gives you the growth potential you’re looking for in a cannabis stock, plus the dividend payout of a REIT.
But this is only one opportunity among many in the cannabis industry. As more and more states legalize the plant, more and more opportunities are opening up for investors…
Illinois Becomes the 11th State to Legalize Cannabis (Making More People Rich)
Cannabis laws are being reformed en masse: Illinois has not only become the 11th – and second largest – state to legalize marijuana, but the first to do so by way of state legislation.
That means the medical, personal, and economic benefits of “America’s Green Gold Rush” are appealing to Republicans and Democrats alike.
One cannabis research executive is hailing Illinois the “Marijuana Mecca of the Midwest,” a hallmark of the rising uncapped profit potential ahead.
Once the feds end cannabis prohibition nationwide, all bets will be off – demand will boost share prices through the roof. But you can still get in on the ground floor, just in time for what could be the windfall of the century.
Illinois is already housing some of our top picks in the industry, so a few of our favorite stocks could get yet another boost.
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