IIPR Stock: Is Innovative Industrial Properties Inc Done Growing?

IIPR Stock Surges Upward—But Is There Room Left to Grow?

For years now, I’ve been locked in on the seemingly boundless opportunities in the U.S. marijuana market. But there’s one security I’m particularly keen on: Innovative Industrial Properties Inc (NYSE:IIPR).

Innovative Industrial Properties stock has had enormous potential and has made many investors very happy over the years. But having said that, with IIPR stock soaring so high, is there still room for the stock to rise?

I’ve had a strong run predicting growth with Innovative Industrial Properties Inc, and I feel that the company has yet to reach its limit. In fact, its shares may still be undervalued.

In the three years I’ve written about Innovative Industrial Properties stock, it has gone up by more than 660%. It has by far been my most consistent and strongest performer.

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Chart courtesy of StockCharts.com

With that massive growth in such a short time, coupled with a slowdown in U.S. marijuana legalization efforts and a general fall in share prices across the marijuana market, it makes sense that some investors would believe IIPR stock to be overvalued—or at least, past its prime.

But that’s where they’ve got it all wrong.

You see, while many U.S. pot stocks are reliant on the future potential locked away in the richest market on Earth, Innovative Industrial Properties stock has far fewer limits to its expansion.

That’s because Innovative Industrial Properties Inc is a marijuana real estate investment trust (REIT). That means, while IIPR stock is tied to marijuana, the company doesn’t actually grow cannabis. Instead, the REIT leases out properties to other companies to produce marijuana from.

That, in turn, has allowed Innovative Industrial Properties to sidestep many of the obstacles that U.S. marijuana stocks face. Notice that Innovative Industrial Properties stock is already listed on the New York Stock Exchange while many U.S. marijuana stocks can’t list on the major U.S. exchanges.

Being on a major U.S. stock exchange opens up Innovative Industrial Properties Inc to a huge inflow of capital from retail investors (who are skittish about over-the-counter securities) and institutional investors (who don’t have to worry about government crackdowns). This is because Industrial Properties Inc doesn’t produce any marijuana at all.

That alone gives IIPR stock the leeway to grow as marijuana legalization is enacted state by state at a gradual pace, while we await a move by the federal government.

What’s more, Innovative Industrial Properties stock can benefit from both medical and recreational marijuana legalization in the U.S. This allows Innovative Industrial Properties Inc the ability to be in all 50 states before many other pot companies.

In other words, the growth potential behind IIPR stock is much better than that of almost any other U.S. pot stock. This positions Innovative Industrial Properties stock to continue to see massive growth despite already having soared by more than 600% in recent years.

Furthermore, as a REIT, Innovative Industrial Properties Inc is mandated to pay out healthy dividends to investors. That’s because a REIT must distribute 90% of its taxable earnings to its shareholders in the form of dividends.

Now, don’t get misled by that number. A REIT could theoretically have no taxable income if it’s posting losses, even if its revenue continues to surge quarter after quarter.

Regardless, it’s nice to have that dependable income coming in every quarter.

Common Stock Dividends

Ex-DividendRecordDeclaredPayableAmountType
06/29/2106/30/2106/15/2107/15/21$1.40Cash, quarterly
03/30/2103/31/2103/15/2104/15/21$1.32Cash, quarterly
12/30/2012/31/2012/14/2001/15/21$1.24Cash, quarterly
09/29/2009/30/2009/15/2010/15/20$1.17Cash, quarterly
06/29/2006/30/2006/15/2007/15/20$1.06Cash, quarterly
03/30/2003/31/2003/13/2004/15/20$1.00Cash, quarterly
12/30/1912/31/1912/10/1901/15/20$1.00Cash, quarterly
09/27/1909/30/1909/13/1910/15/19$0.78Cash, quarterly

(Source: “Dividend History,” Innovative Industrial Properties Inc, August 8, 2021.)

Better yet, the payout gets larger and larger every quarter. When you see huge dividend growth, you can expect that the revenue has soared in tandem.

In the second quarter of 2021, the company saw revenue of $48.9 million. This represents an increase of over 100% compared to the year before. (Source: “Innovative Industrial Properties Reports Second Quarter 2021 Results,” Innovative Industrial Properties Inc, August 4, 2021.)

The dividend went to $1.40, up about 32% from last year.

Moreover, since April, the company has expanded in several states, including Pennsylvania, Michigan, Massachusetts, Florida, and Illinois.

And remember that all this is taking place during the pandemic, making it all the more impressive. In fact, over the past 12 months, Innovative Industrial Properties has more than doubled its share price due to its impressive numbers and expansion.

Chart courtesy of StockCharts.com

Innovative Industrial Properties Inc has proven itself to be pandemic-proof. That’s a rare quality for a marijuana stock. It means investors can better withstand times of uncertainty while still gaining exposure to the massive growth potential in the marijuana market.

I believe that IIPR stock is no longer just a top marijuana stock for all the above reasons. In my opinion, it is the ultimate marijuana stock.

Innovative Industrial Properties Inc’s ability to make gains as the country slowly rolls out legalization state by state makes it uniquely suited to benefit.

In fact, the slow rollout of legalization is actually better for Innovative Industrial Properties stock. It allows the company to make its gains incrementally and over a longer period, rather than in one big hype-fueled surge that would come about during federal marijuana legalization.

IIPR stock looks able to gain as the company continues to expand in 2021—and for years to come.

Analyst Take

It makes sense for pot stock investors to look twice at Innovative Industrial Properties stock and wonder if it can indeed continue to grow.

Much of the U.S. has yet to legalize marijuana. However, with Innovative Industrial Properties Inc’s ability to expand into new states (not to mention that each state needs its own growing capabilities due to restrictions on marijuana transport), you have a situation that seems almost designed to benefit IIPR stock for a long time.