2 Reasons to Buy Innovative Industrial Properties Stock, and 1 Reason to Sell
As one of the few cannabis stocks to beat the market over the last three years, with a return of 36.7% compared to the market's 29.1%, there's more than one way in which Innovative Industrial Properties (NYSE: IIPR) isn't a typical marijuana business. Instead of selling buds or other cannabis products to consumers, it buys and leases out cultivation spaces that the industry's growers need to compete.
And that's why it can sit back and collect rent from its tenants for years, whereas they need to constantly develop their brands and right-size their retail footprints in light of consumer preferences and shifting patterns of demand. Let's look at two arguments for buying IIP's shares and one for selling so that you'll appreciate its wealth-building potential.
At the moment, one of the biggest reasons to buy shares of Innovative Industrial Properties is its dividend, which has a decently high forward yield of 7.9%. As a real estate investment trust (REIT), the company pays for its dividend using rental income from its portfolio of cannabis cultivation properties. To get those cultivation spaces in the first place, it does sale-leaseback transactions wherein it buys real estate from cannabis businesses and then leases the new purchase back to the original owner, who then becomes a rent-paying tenant.
Source Fool.com
