Investing In Cannabis In A Volatile Market
Several investors are increasingly looking for dividend investments in cannabis due to the general market unpredictability. A few options, though rare in the market, have dropped to appealing trading levels for new investors. The US cannabis industry, which earns billions of dollars annually, has been harmed by the federal cannabis law’s delayed implementation. Investors may benefit from the current market trend by taking advantage of the sector’s decline. The cannabis market is expected to more than double in size over the next five years, providing marijuana REITs with a chance to increase in value consistently.
Cannabis REITs pay dividends to long-term cannabis investors. The relative scarcity of dividends in the cannabis industry is one of the factors enticing long-term investors to these cannabis equities. During the previous five years, cannabis REITs have offered the most significant dividend increases, averaging over 20% annually. Yet, cannabis REITs pay out at a rate more significant than the average for the REIT industry, at about 70% of their available FFO. Let’s look at the top cannabis REIT for your portfolio right now if you want to make a long-term investment in the industry.
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Top Cannabis REIT For Cannabis Investors In 2023
- Innovative Industrial Properties, Inc. (NYSE: IIPR)
Innovative Industrial Properties, Inc.
Innovative Industrial Properties, Inc. is a cannabis-focused real estate investment corporation based in the United States. Now, 8.7 million square feet of the company’s rentable space are available, and 2.5 million square feet more will be in the near future. Most of these structures are fully leased, with an average lease term of 16.4 years. Now, the corporation owns 111 properties scattered throughout 19 states. In addition to the additional $227.1 million in predicted rent payments, IIP has already spent $2.4 billion on property renovations as of April. IIP expects that due to its continued real estate investments, particularly in Pennsylvania and Massachusetts, its lease portfolio will expand significantly in 2022.
When the corporation released its fourth quarter and full year 2022 results on February 27, it outperformed forecasts. IIP generated total revenues of nearly $70.5 million for Q4 2022, a 20% increase from roughly $58.9 million for the same quarter in 2021. IIP generated around $276.4 million in total revenues for the entire year of 2022 as opposed to $204.6 million in 2021, a 35% increase.
Dividend Distribution
Additionally, IIP reported FFO (diluted) and FFO (diluted) per diluted share for 2022 of approximately $211.3 million and $7.64, respectively. It also reported net income attributable to common stockholders (diluted) for the year 2022 of roughly $153.0 million and net income attributable to common stockholders (diluted) per diluted share for the year 2022 of approximately $5.52. IIP paid stockholders of record as of December 30, 2022, a quarterly dividend of $1.80 per common share, or an annualized dividend of $7.20 per share, on January 13, 2023. In Q4 2022, IIP had an AFFO payout ratio of 85%.
Innovative Industrial Properties issued $351 million in new common shares in 2022 alone to pay for the company’s asset growth and tenant improvement projects. These issuances dilute equity holders, which naturally drives down share prices. Dividends paid by the corporation were $184 million. Also, the business must spend close to $100 million on renovations promised to tenants to fulfill its lease obligations. Innovative Industrial Properties has to deal with various demands for its cash flow despite its increasing profitability.
IIPR Stock Performance
On March 10th, IIPR stock closed at $80.03, down 9.33% in the last month of trading. The stock is trading in a 52-week price range of $78.82-$211.17, down 21.04% year to date. IIPR stock has a 12-month median price target of $125 per share, according to Tip Ranks analysts. In this forecast, this would be a 56.23% increase over the last trade price of $80.03.
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Top Cannabis REITs For March 2023
Cannabis REITs can be a good choice for new investors looking for long-term investments to get into the cannabis industry. When investing in a company, you should always do your research. It may just be necessary to briefly check the companies’ financial statements and press releases to identify which ones represent the greatest investments. If you want to make long-term investments in 2023, this top marijuana REIT could be the one to watch.
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