Investors won’t be surprised to learn that Innovative Industrial Properties is a strong option
Real estate investment trusts (REITs) distribute most of their income to shareholders to maintain their tax-advantaged status. There are many benefits to investing in dividend-paying companies, especially if you plan to invest in them for the long term. In fact, many investors who have put their money into Innovative Industrial Properties (IIP) shares over the past few years are seeing returns today.
Cannabis companies that pay dividends also generate significant amounts of cash. Therefore, they are generally solid companies with good long-term performance prospects.
There is no doubt that the past 12 months have been a pretty tough period for marijuana REITs. After rising interest rate pressure, these companies have seen a rise in the cost of borrowing and as a result, marijuana stocks are trending lower across the board. Still, experts continue to highlight the great returns of this company year after year, which plays a major role in investors’ decision-making.
The company acquires and develops industrial cultivation properties from existing licensed medical marijuana operators. Once everything is in place, these properties are leased through a long-term sale-leaseback arrangement, as well as a triple-net model.
This entire structure has proven to be quite successful for IIP, as it provides much-needed liquidity to operators in a highly regulated industry. In turn, the company earns reliable income over periods in excess of 15 years.
IIP’s portfolio of 111 properties in 19 states is 100% occupied is what has given it great stability today, especially since more than 90% of its tenants pay rent on agreed leases. Its plan to grow its funds from operations ( FFO ) has been quite successful so far. A growing FFO translates into ample coverage for its current dividend and debt obligations.