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This Pot Stock Grew 157% Last Year. Is It Still a Buy?

By Eric Volkman - Jan 30, 2021 at 10:00AM

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The company is a favorite of marijuana investors, but it's a question of whether good potential remains in its business.

One marijuana stock that has thumbed its nose at the bears is Innovative Industrial Properties (IIPR -5.82%), a specialty real estate investment trust (REIT) that (gasp!) actually manages to turn a profit. No wonder it's so popular with investors. But can it continue on its long bull run?

To answer that question, longtime contributor Eric Volkman briefly discussed the prospects for Innovative in the near future with healthcare and cannabis bureau chief Corinne Cardina. This video segment from Motley Fool Live was recorded on Dec. 22, 2020.

Corinne Cardina: As a REIT stock, of course, [Innovative] has a dividend that yields about 2.5% right now. The stock itself is up 157% year to date. If you bought that in January, you're probably pretty happy.

Eric Volkman: Oh, it's a good stock. It's a really good stock, and I'm not scared by a number like that.

It's up 157%, but think of potential scope. This industry is only going to expand one way or another. These guys are involved in almost every state that has a marijuana business. It's not going to be that hard for them to scale. Like I say, they're always going to be a good go-to financing option.

And also, the dividend. Keep in mind the REITs are basically legally obligated to pay out 90% of their net profit. So most of what they make goes directly into shareholder pockets. And it's saying something with Innovative, I believe they made nine dividend payments, something like that. Out of those nine dividend payments, in seven instances -- I could be getting the numbers [wrong] but it's close -- in something like seven of those instances, those dividends have been raised, so it keeps going up. I think the company still has plenty of avenues for growth, plenty of potential customers.

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