Just a week ago in our most recent article about Innovative Industrial Properties, we said that at $40 per share, we believed that shares were attractive. Fast forward 7 days later and the stock has doubled, currently trading at $81.
Now, we are still very cautious when it comes to the current economic environment we are in, but we feel that the companies, like IIPR, who have solid fundamentals are the ones that investors should be looking at.
Now let’s face it when the market plunges like it did last week, it’s pretty easy to get scared. Emotional investors see heavy losses and become reluctant to purchase good companies when they see massive sell-offs.
What makes a good investor good, is the ability to ignore the chatter and emotions while still carrying out your long term approach. During this market volatility, a lot of opportunities are created in some of the greatest companies.
Even after this rebound, we still believe that there are still a lot of reasons to like IIPR.
The first reason is because of their dividend yield. As growth concerns intensify, many investors will start to put more emphasis on companies that pay dividends as opposed to just offering a growth opportunity.
Despite the recent bounce in share price, IIPR still offers a very healthy 4% dividend yield at current prices. This yield easily outpaces many of the consumer staples and utility companies and also offers a growth opportunity when it comes to the cannabis market. We have always been a big fan of IIPR due to the income aspect they can offer as they will inevitably attract a wider base of investors, especially during these tough times.
To continue to build the bullish case for IIPR, the fact that the company specifically targets the medical cannabis market as opposed to the recreational market we feel is a huge benefit. Carrying a high yield is one thing, but sustainability of a company’s dividend is another story.
Medical cannabis revenues tend to be much more stable and predictable, especially during a time like this where consumer spending is very unpredictable. We expect IIPR to continue to generate long term stable revenues from their medical cannabis tenants and should be able to continue paying out their dividends. Most of IIPR’s tenants are on long term triple net leases which we favor.
Last but not least, IIPR has the ability to capitalize on further acquisitions, especially if real estate prices decline, which should offer growth opportunities for the company down the road.
Overall we believe that IIPR is in a great position to ride out this economic storm, and even though it has seen its stock has seen a dramatic bounce off of lows, it could be a great stock to add to a long term portfolio.
And keep your eyes on IIPR because if more volatility hits and the market plunges again, investors might be able to pick up shares at discount prices.
Want more great investing ideas?
Reitmeister Total Return portfolio – Discover the portfolio strategy that Steve Reitmeister used to produce a +5.13% gain while the S&P 500 fell by -14.97%.
Free Access Pass to Wealth365 Online Summit– join many of the world’s top investors to learn strategies to not just survive, but actually thrive in the midst of this bear market.
IIPR shares were trading at $81.41 per share on Thursday afternoon, up $7.25 (+9.78%). Year-to-date, IIPR has gained 7.30%, versus a -19.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Aaron Missere
Aaron is an experienced investor who is also the CEO of Departures Capital. His primary focus is on the cannabis industry. He also hosts a weekly show on YouTube about marijuana stocks. Learn more about Aaron’s background, along with links to his most recent articles. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|IIPR||Get Rating||Get Rating||Get Rating|