Blue moons. Four-leaf clovers. There are some things that you don't see very often. 

I think ultra-high-yield dividend stocks that analysts expect to skyrocket should also be in that group. They're rare, but they do exist. Wall Street thinks this 10.7%-yielding dividend stock could soar 68% higher over the next 12 months.

A REIT on the wrong track

Innovative Industrial Properties (IIPR -0.64%) ranks as the first -- and so far only -- real estate investment trust (REIT) focused on the U.S. cannabis industry to list its shares on the New York Stock Exchange. When it comes to providing real estate capital to U.S. cannabis operators, no rival comes close to Innovative Industrial Properties (IIP).

The company currently owns 108 properties in 19 states. Five of them are under development. IIP leases these properties to cannabis operators, and the resulting payments have allowed the REIT to pay an attractive dividend and increase it by 620% over the last five years.

However, IIP's dividend yield isn't so high just because the company has increased its payout. There's also the more worrisome fact that the REIT's share price has plunged more than 70% since the beginning of 2022.

The primary factor behind this steep decline is that several of IIP's tenants faced serious financial difficulties. Some defaulted on rent payments. 

Why analysts are bullish

There aren't many analysts who cover IIP. In April, Refinitiv surveyed eight analysts with ratings on the stock. The number fell to only two in May. However, both of those analysts recommend IIP stock as a "strong buy." 

Refinitiv's research includes five analyst price targets. The average of those targets reflects an upside potential of 68% over the next 12 months. Even the most pessimistic analyst thinks that IIP stock could jump close to 19%. 

Why is there such a bullish overall take on IIP right now? Perhaps the best reason is that the REIT's financial position has held up quite well, even with the issues with several tenants.

For example, in the first quarter of 2023, IIP's rent collections, as a percentage of base rent due, contractually totaled 98%. The company's revenue increased 18% year over year to $76.1 million. Its adjusted funds from operations (FFO) also rose 18% year over year to $63.4 million.

Are analysts right?

I'm not convinced that IIP stock will soar 68% over the next 12 months. It might not come anywhere close to that kind of gain. 

My skepticism stems, in large part, from simply looking at the state of the U.S. cannabis industry. Cannabis operators face big issues, including a supply and demand imbalance and a lack of enforcement in some states on illegal cannabis sales. I don't see any compelling reason to think that these issues will be resolved over the near term.

However, I don't think that IIP's ultra-high dividend is in any serious danger. The stock's valuation is also really low. I doubt that it will fall much more than it already has. These two factors could make IIP especially attractive to income investors.

My view is that the issues facing the cannabis industry will eventually be resolved. I expect that the U.S. cannabis market will expand in the coming years.

IIP should remain one of the top sources of capital for cannabis operators. Long-term investors who are willing to be patient could enjoy sizable total returns from this stock.