IIPR Stock: This Marijuana REIT Is on Verge of Major Recovery

IIPR Stock: Marijuana REIT on Verge of a Major Recovery
iStock.com/OlegMalyshev

Marijuana REIT Surge

Every pot stock stands to gain from marijuana legalization in the U.S., but few companies are as well suited to expand when marijuana legislation is passed in America as Innovative Industrial Properties Inc (NYSE:IIPR).

IIPR stock, a marijuana real estate investment trust (REIT), is particularly equipped to benefit from cannabis legalization due to its business model.

You see, marijuana REITs profit by basically acting as real estate brokers for marijuana companies. By leasing out land to pot companies interested in growing crops, REITs can indirectly benefit from legal marijuana’s continued expansion across the United States.

What’s more, Innovative Industrial Properties Inc doesn’t care if its medical or recreational marijuana that’s being grown and sold. It’s far less constrained by laws compared to companies that will obviously see a decline in sales if marijuana is only partially legalized in the country.

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What’s more, IIPR is one of the biggest cannabis REITs out there. The company owns about 30 properties in Arizona, California, Colorado, Illinois, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New York, Ohio, and Pennsylvania—totaling about 2.1 million rentable square feet. (Source: “Company Profile,” Innovative Industrial Properties Inc, last accessed October 3, 2019.)

And of course, the ultimate kicker when it comes to marijuana REITs: they have to distribute 90% of their profits to shareholders in the form of dividends each quarter.

Chart courtesy of StockCharts.com

The combination of Innovative Industrial Properties stock’s high growth potential with a strong dividend has long been a potent allure for investors.

Combined with the increasing likelihood of federal marijuana legalization in the U.S. and you have what amounts to a very powerful marijuana stock.

Another massive boon for the company is that its share price has recently fallen somewhat. That has led to an opportunity for investors to practice that age-old idiom “buy low, sell high.”

In fact, I have written about IIPR stock when it was much lower than it is now. Currently over $88.00, I feel that this stock has more room to grow, easily able to gain 20% in the next few months (on top of that nice quarterly dividend).

The thing is, the marijuana REIT sector is not nearly as crowded as the pure-play marijuana stock market, making Innovative Industrial Properties stock unique.

On top of that, the company operates in an area that is essential to the continued growth of the legal cannabis market, making its stock a solid contender for long-term gains well into the future.

When investing in marijuana stocks, there are a few key factors that investors will want to consider.

One is whether the stock has room to rise or it has already reached its ceiling. In the case of IIPR stock, there are still dozens of U.S. states and millions of acres of real estate that could be used for marijuana production, meaning the company has extensive room to expand.

Another important consideration is just how much the company stands to gain from the overall industry growth.

In the case of Innovative Industrial Properties Inc, American federal legalization would make the company free to ply its wares across the entirety of the U.S. without fear of interference by the authorities. Such a development would be a massive boon for Innovative Industrial Properties stock.

Finally, investors want to look at what sets this company apart from its competitors. For IIPR stock, that’s easy enough: it’s one of the few marijuana REITs around, making it an ideal company to hitch one’s wagon to as the legal pot industry grows exponentially.

Overall, this is a hot pot stock with a lot of potential, so investors might want to take a long, careful look at it.

Analyst Take

Potential, stability, ambition—those are three key pillars to a successful long-term investment. Innovative Industrial Properties stock has all three and is looking to profit big-time from the coming changes in the marijuana market.

As such, IIPR stock could be a great opportunity for investors looking to gain exposure to the long-term gains promised by the coming marijuana revolution.