Innovative Industrial Properties (IIPR): 2019 Top Picks' Mid-Year Update

07/08/2019 5:00 am EST

Focus: REITS

Timothy Lutts

Publisher, Cabot Heritage Corporation

Timothy Lutts, editor of the specialty advisory service Cabot Marijuana Investor, chose Innovative Industrial Properties (IIPR) as his favorite investment idea for 2019. In the first half, the stock rose 172%. Here's his update on the cannabis-related REIT.

Back in December, when I chose Innovative Industrial as my stock of the year, I was thinking above all of reducing risk while investing in the fastest-growing industry in America.

In the savage market of December, I wanted a solid business that would withstand a weak stock market, and I reasoned that this real estate investment trust was just the ticket.

In my view, it enjoyed steady and growing income from leasing its eleven properties to marijuana companies, and its investors enjoyed steady and growing dividends from that cash flow. Plus, there was no competition!

But the market is full of surprises. Not only was IIPR resistant to year-end market weakness, it also proved to be a market leader in the first half of 2019, as business boomed (the firm now has 22 properties in 11 states.

First quarter revenues were up 146% from the year before), and the dividend of 2% proved an added attraction in today’s low-interest-rate environment.

This REIT is expected to grow by 52.7% next year. The shares have a current dividend yield of 1.93%, paid quarterly.

Long-term prospects remain great for the REIT, but short-term, the stock grew severely out of trend to the upside in early June (up 64% in three weeks), so on June 20, I recommended that my readers take partial profits (I suggested a third) while holding the rest of their position long-term.

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