What happened
Shares of Innovative Industrial Properties (IIPR 0.06%), a cannabis sector-focused real estate investment trust (REIT), returned 72.5% in 2019, according to data from S&P Global Market Intelligence. For context, the S&P 500 index returned 31.5% last year.
Image source: Innovative Industrial Properties.
So what
We can attribute Innovative Industrial Properties stock's strong 2019 performance to the company's robust financial performance and to management's boosting of the attractive dividend.
In the third quarter, as reported in early November, rental revenue soared 201% year over year to $11.2 million, driven largely by acquisitions. During the quarter, IIP added 10 new properties, bringing its portfolio's total to 31 fully leased properties at the quarter's end. Earnings per share (EPS) rocketed 162% to $0.55, and adjusted funds from operations (FFO) per share jumped 126% to $0.86. (FFO is a closely watched metric for REITs, as it's the driver of dividend changes.) Wall Street was looking for EPS of $0.47 on revenue of $10.7 million, so the company easily beat both expectations.
IIP's year-over-year revenue growth has accelerated throughout 2019: 201% in Q3, 155% in Q2, and 111% in Q1.
The company paid a quarterly dividend of $0.78 per share on Oct. 15 to stockholders of record as of Sept. 30, an increase of 30% from the previous quarter and 123% from the year-ago period. As of the market's close on Jan. 8, the stock's dividend yield is 5.4%.
Innovative Industrial Properties' great financial performance and meaty dividend allowed it to buck the cannabis space's downtrend last year. Shares of leading Canadian cannabis growers Canopy Growth, Aurora Cannabis, and Cronos declined 21.5%, 56.5%, and 26.2%, respectively, in 2019.
Now what
IIP doesn't provide guidance. For the fourth quarter, Wall Street is anticipating EPS of $0.57 on revenue of $14.6 million, representing growth of 138% and 205%, respectively, year over year.
