Marijuana REIT: IIPR Stock Prediction
There are fewer safer bets in the often volatile marijuana market than marijuana REITs. A real estate investment trust (REIT) is a company that owns and usually operates income-producing property.
Seeing as how there is a boom in marijuana companies sprouting up and they need land to grow their product, it would make sense for a marijuana REIT to thrive.
Enter Innovative Industrial Properties Inc (NYSE:IIPR).
IIPR stock has been surging in 2019. And while I expect a pullback to take place in the near future, I still have confidence in the stock’s ability to make gains.
Back in February, I wrote that Innovative Industrial Properties stock could double in 2019. And guess what? I was right.
Chart courtesy of StockCharts.com
As can be seen on the chart above, I made a pretty accurate call when it comes to IIPR stock.
Innovative Industrial Properties buys land and leases it back to cannabis producers, freeing up capital for pot cultivators while generating income for itself.
This marijuana REIT has a ton of potential by virtue of operating at a very prosperous time in the marijuana industry.
With so many companies cropping up and needing land, Innovative Industrial Properties is in a prime position to take advantage of that need and yield massive gains as a result. We’re seeing that play out on the company’s stock chart.
Innovative Industrial Properties stock has more than tripled over the past year and I imagine that more gains are in store for the company.
But there is growing concern among analysts that the company may have topped out.
While I understand that concern, in the long term I think they’re wrong about the future of Innovative Industrial Properties. After all, there’s a whole lot more marijuana business yet to be grown. But they may be correct in the short term.
The growing concern is bound to impact investor confidence and potentially spur a pullback, but overall, I still strongly support IIPR stock in the long run due to the massive potential that remains in the marijuana industry.
But for those looking to lock down gains, now would be a good time to sell before any large setback befalls the company. But for those willing to stomach the prospect of a bit of a down period, holding on is likely the best play—if a bit riskier.
IIPR Stock’s Marijuana Dividend
As a REIT, Innovative Industrial Properties Inc must distribute at least 90% of its taxable income to its stockholders through a dividend, making it one of the very few companies that is involved in the marijuana trade to provide a dividend.
That marijuana dividend means that you get guaranteed income on top of possible 100% gains. That kind of combination is mouthwatering to most investors, as it should be.
Innovative Industrial Properties is also expanding across the U.S., being one of the few publicly traded companies on the New York Stock Exchange that is tied to the booming pot industry in America. In the past two months alone, the company has expanded into Pennsylvania and Michigan.
The overall picture, then, is of a strong company operating in a very lucrative market and being one of the few such companies available to investors.
Not to mention that the IIPR dividend has been trending steadily upward.
The second-quarter 2019 dividend hit $0.60 per share of common stock, representing a 33% increase over the company’s first-quarter 2019 dividend of $0.45 per share of common stock, and a 140% increase over IIPR’s second-quarter 2018 dividend of $0.25 per share of common stock. (Source: “Innovative Industrial Properties Declares Second Quarter 2019 Dividends,” Innovative Industrial Properties Inc, June 14, 2019.)
Innovative Industrial Properties Earnings Report
The company also posted pretty strong numbers in its most recent quarterly report.
The company’s total assets increased by roughly $140.0 million to $420.4 million from the prior year. Innovative Industrial Properties Inc’s total revenue also saw a massive bump, climbing to $6.8 million from $2.8 million a year earlier. (Source: Innovative Industrial Properties Inc Quarterly Report,” Innovative Industrial Properties Inc, May 9, 2019.)
These numbers are all marked improvements over the previous year and they show signs of a growing company.
The impressive results from the quarterly report resulted in a huge uptick in value for IIPR stock, as evidenced by the chart at the beginning of this piece.
Following the release of the report, in June, the stock skyrocketed.
Now, however, we’ve seen a string of a few days with pullbacks. While, again, I don’t think these falls portend doom for Innovative Industrial Properties, I do believe that some bumps lay ahead for the company.
Overall, however, I’m still very bullish on Innovative Industrial Properties stock and believe that at least another 50% gain is possible in 2020— maybe more depending on how far it slides in 2019, if it does indeed fall significantly.
If it does, that will mark another opportunity for investors who missed the boat initially to make some serious money off this strong marijuana REIT.
REITs are not the flashiest pot stocks and don’t exactly grab all the headlines, but they are among some of the best plays in the industry.
Consider that, in June, many other pot stocks faltered while IIPR stock continued to see explosive gains. That speaks to the relative stability of marijuana REITs more broadly and Innovative Industrial Properties specifically.
Overall, marijuana REITs are set to prosper for years to come as the pot industry expands across the United States.
While the near future may hold some bumps for Innovative Industrial Properties stock, ultimately it still looks like a great opportunity for investors.