Innovative Industrial Properties is a solid option for investors on any level
When investing in stocks, one of the main stock market indicators for valuing companies is their dividend yield. Stock returns come from several sources, and dividends represent one of the main ones. If a cannabis investor has a preference for dividend yields, he or she may find the answer in Innovative Industrial Properties (IIP).
Cannabis companies with a good dividend yield ratio are generally well regarded. They are usually stable companies, stocks that distribute profits (or a good part of them) to their shareholders on a sustained basis. IIP is a real estate investment trust (REIT) that, for years, has managed to find a leadership position within the marijuana industry.
The firm is distributing a yield of nearly 7.2% and, in turn, has increased its quarterly payout by 1100% since its September 2017 payout. Similar to any other REIT, IIP has a simple-to-understand operating model. The company focuses on buying properties that it can subsequently lease out to reap the rewards of rental income.
What makes this REIT different is that it predominantly purchases medical cannabis processing and cultivation facilities in states where there is a law allowing the market. According to September data, the company owned 111 properties covering 8.7 million square feet of leasable space in 19 states.
One thing that is extremely noteworthy about IIP is that all of its land is triple net leased (NNN). An NNN is a lease of property under which the tenant or lessee agrees to pay all expenses of the property, including property taxes, property insurance, construction, and maintenance. While this method may result in lower rental income, it significantly removes any surprise expenses from the IIP equation.