We typically recommend income investors purchase blue-chip dividend stocks, with long histories of paying dividends and growing their dividend payouts., explains Bob Ciura, editor of Sure Passive Income Newsletter.

However, we also acknowledge the high potential returns of dividend growth stocks. While dividend growth stocks can be riskier than steady blue chip dividend payers, they can also outperform with dividends and share price appreciation.

For example, Innovative Industrial Properties (IIPR) operates as a real estate investment trust, or REIT, in the cannabis industry. Cannabis remains illegal on the federal level, which brings an elevated risk profile for IIPR.

However, the rapid growth of the cannabis industry has provided Innovative Industrial with impressive growth, and shareholders with excellent returns.

The stock has delivered year-to-date returns above 40% including dividends. With the U.S. cannabis industry still in its infancy, there remains huge potential for IIPR to keep growing.

In the third quarter, revenues and normalized AFFO per share increased 57% and 34%, respectively. As of the past November, 100% of the company's properties were leased with a weighted-average remaining lease term of approximately 16.7 years.

Innovative Industrial has consistently raised its quarterly dividend quarter-over-quarter over the past few quarters. The latest dividend increase to $1.50 represented a 7% quarter-over-quarter increase and a 28% increase from the same quarterly payout in the previous year.

There is plenty of growth up ahead for the REIT. As medical cannabis legalization continues across the U.S., the company keeps growing through acquisitions of new properties. As of December 14th, IIPR owned 103 properties located in 19 states, representing a total of approximately 7.7 million rentable square feet.

With access to public markets, we believe IIPR has a significant competitive advantage as its management can issue debt and equity much cheaper than its few private competitors.

IIPR also proved to be highly resilient during the coronavirus pandemic. Despite the headwinds the pandemic caused across multiple industries including real estate, the company was barely impacted, continuing its proven acquisition-based growth model.

Operating in the cannabis industry inevitably brings a higher level of risk. Still, its average lease duration of 16.7 years is very attractive among REITs of any sort. IIPR has a low dividend yield of 2.4% compared to other REITs, but the stock more than makes up for a low yield, with impressive dividend growth and excellent capital appreciation.

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