Marijuana stocks have taken the investing world by storm, and after a rough year in 2018, many cannabis-related companies have gotten out to a roaring start in 2019. With huge growth opportunities ahead of these companies, many of the investors who look closely at marijuana stocks are looking for explosive share-price gains and not necessarily caring much about getting income from their shareholdings.

Yet dividend investors do have one stock that gives them exposure to the growing cannabis industry while paying quarterly income. Not only has Innovative Industrial Properties (NYSE:IIPR) paid dividends consistently during its short history, but it's also raised those dividends on multiple occasions along the way. Below, we'll take a closer look at Innovative Industrial Properties to see whether it's likely to deliver another set of dividend boosts in 2019.

Dividend stats on Innovative Industrial Properties

Metric

Current Stat

Quarterly dividend per share

$0.35

Dividend yield

2.7%

Number of consecutive years with dividend increases

1 year

Payout ratio

233%

Last increase

September 2018

Data source: Yahoo! Finance. "Last increase" refers to ex-dividend date.

Why Innovative Industrial Properties pays a dividend

The key to why Innovative Industrial Properties stands out from the marijuana stock crowd is its corporate structure. Innovative Industrial is a real estate investment trust, owning commercial properties that its clients lease as production facilities for growing and processing medical marijuana. With multiple U.S. states allowing for legal medical marijuana sales and more states joining their ranks every year, Innovative Industrial builds relationships with growers and then works with them to find ideal properties for their needs.

Innovative Industrial makes money two ways. For clients who are new players in the marijuana arena, it can simply rent out facilities that it already owns or find suitable properties to buy before leasing them to clients. But for producers who already own real estate in their own right, Innovative Industrial can purchase those properties and then immediately lease them back to the grower, freeing up cash for the client while ensuring streams of income for the REIT through a long-term lease arrangement.

Hand holding a marijuana leaf betwen finger and thumb, with a greenhouse full of plants behind.

Image source: Getty Images.

How Innovative Industrial has grown its dividend

To qualify as an REIT, Innovative Industrial must pay out at least 90% of its income as dividends, and that's resulted in some healthy dividend growth already. Even though the REIT is only a couple years old, it's already boosted its quarterly payouts twice. Starting at $0.15 per share, the company made an increase to $0.25 per share in early 2018 and followed up with another boost to $0.35 later in the year.

IIPR Dividend Chart

IIPR Dividend data by YCharts.

The rise in dividends has also supported ongoing share-price increases. As a result, yields have stayed relatively close to the 3% mark even as the payout has risen dramatically.

Innovative Industrial's future looks bright

Innovative Industrial had a great year in 2018. The REIT managed to double the size of its property portfolio, and it successfully raised capital through share offerings on two separate occasions. That gave the company the money it will need in order to keep acquiring marijuana-related properties.

So far, Innovative Industrial seems poised to keep using its successful business model to expand further. As more players get involved in medical marijuana cultivation and processing, the REIT will stand ready to meet their real estate needs. With experience in dealing with the special regulations and other requirements for facilities involved in medical marijuana, Innovative Industrial has a competitive edge that traditional real estate companies can't match. It's a natural fit for cannabis entrepreneurs looking to start or expand their facilities to work with Innovative Industrial, given its expertise.

Of course, it's always possible that Innovative Industrial will get ahead of itself. But if the REIT can keep expanding its portfolio, the greater income should lead to higher dividends over time. That should help Innovative Industrial build an even stronger reputation in the industry, putting it in position to profit from the cannabis craze for years to come.

Check out the latest Innovative Industrial Properties earnings call transcript.