When market momentum is going in the opposite direction we want…
When the entire market is stuck in a tight trading range – with no one sure which direction it’ll break out in…
It’s the perfect time to switch focus from pursuing capital gains to collecting income.
That’s why before we all head into the weekend…
We want to spotlight a 8.2%-yielding stock in an “evergreen” industry that’s growing at nearly 15% a year.
Not only that, but the short-term momentum on this stock has actually been positive – defying the market – with the stock recently rising over its short and medium-term moving averages.
And despite facing some operational challenges, this stock was able to weather it and still grow its cash flows (making it unlikely it’ll need to cut its attractive dividend).
That’s impressive – especially when combined with its high yield and market-defying momentum
Of course, this positive momentum also means that its yield will drop as the underlying stock price rises…
Meaning if you want to capture a yield that’s at least 8% – you’d better act fast.
Innovative Industrial Properties, Inc. (IIPR)
IIPR is a REIT that owns marijuana growing facilities in a net leaseback model. This means the tenant buys the property, sells it to the REIT, and then leases it back in a long-term contract (while being responsible for most property-level expenses). This allows the tenant to free up their balance sheet and cash.
Now, pot stocks were red hot a couple years ago – but they’ve since come crashing back down to earth. News that U.S. health officials may reclassify marijuana’s classification at a federal level has sent pot stocks soaring over the past week, and IIPR is no exception.
However, those capital gains are unlikely to last – but IIPR’s steady yield will. Despite some challenges with tenants, its rental collection rate still stands at 98%, and earnings continue to increase. Management is also actively managing its portfolio, and its average remaining lease length on its properties are nearly 15 years.
With the cannabis market expected to post a compound annual growth rate of 15% a year in the U.S. – without accounting for any federal reclassification – the sector’s earnings outlook is strong.
But with strong capital gains potential unlikely to return without federal reclassification, your best bet may be the income play – and IIPR is the ideal vehicle for doing so.
To your wealth,
Felix @ Ace of Investing
