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Why Marijuana Stock Innovative Industrial Properties Gained 45% in 2018

By Beth McKenna - Jan 9, 2019 at 8:04PM

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This cannabis stock is unique in that it pays a dividend, currently yielding 3.1%.

What happened

Shares of Innovative Industrial Properties (IIPR 1.88%) returned 45% in 2018, according to data from S&P Global Market Intelligence

The company -- a real estate investment trust (REIT) focused on facilities used for growing and processing cannabis -- owns 10 fully-leased properties in states where medical marijuana is legal.

Interior view of a large cannabis greenhouse.

Image source: Innovative Industrial Properties.

Innovative Industrial Properties stock was particularly strong last year given that the overall market was down. The S&P 500 and Nasdaq indexes had "returns" in negative territory, losing 4.4% and 3.9%, respectively. (In 2019, the company's shares are up 13.5% through Tuesday, Jan. 8.)

For folks like me, who like to see stock charts, here you go:

IIPR Total Return Price Chart

Data by YCharts.

So what

We can attribute the stock's good performance in 2018 to the company's strong financial results, along with investors pouring more money into cannabis stocks in general.

Here are the key metrics for the company's most recently reported quarter

Metric

Q3 2018 

Q3 2017

Year-Over-Year Change

Revenue

$3.93 million

$1.56 million   

152% 

Operating income

$1.57 million 

$295,000

432% 

Net income

$1.49 million

$334,000

346%

Earnings per share 

$0.21

$0.09

133%

Adjusted funds from operations (AFFO)*

$2.58 million

$724,000

256%

AFFO per share

$0.38

$0.21

81%

Data source: Innovative Industrial Properties. *Adjusted funds from operations (AFFO) are the primary driver of dividend increases for REITs. 

Now what

Innovative Industrial Properties is worth putting on your watchlist. Compared with buying shares of cannabis growers, it offers a way to invest in the fast-growing legal cannabis market that's less volatile -- and that should prove to be less risky. 

 

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Stocks Mentioned

Innovative Industrial Properties Stock Quote
Innovative Industrial Properties
IIPR
$111.94 (1.88%) $2.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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