The cannabis boom during the covid pandemic benefited the marijuana sector to a great extent. That said, U.S. cannabis outshone their more legal Canadian counterparts. The Canadian industry is still challenged with some regulatory hold-ups, with less legal stores than expected, and increasing black market sales.
Because marijuana is somewhat illegal (at least at the federal level), some people are not willing to look at cannabis companies. But Innovative is a unconventional pot stock that gives a safe choice for those people since it has no direct involvement with marijuana.
The company experienced an excellent 2020 and a better start to this year. Let’s recap how it did and what we might see in the upcoming second-quarter results due today.
Another record quarter?
In the company’s first quarter, its overall revenue climbed 103% y/y to $43 million. Increasing revenue also raked in another quarter of profits. Net income expanded to $26 million from $12 million in the year-ago time frame, and adjusted funds from operations also went up by 117% to reach $38 million for the quarter. For a REIT, adjusted funds plays the same role as net earnings for non-REITs. It decides how much cash is there to be given to shareholders in the form of dividends.
For the time between Jan. 1 and May 5, Innovative bought three new locations, as well as adding more land to an existing property. As of May 5, it owned 69 properties in 18 states; 100% of these are rented out.
This model has aided Innovative in not only growing its profits but also protecting itself from the volatility of this industry. It ended its first quarter with $661.4 million in cash and no debt.
Buy this stock now?
A new perk of investing in Innovative is that it gives a dividend, with a yield of 2.6%. However, when looking at a dividend paying stock, consistency is more important than yield. The company has been consistently giving and also boosting its dividend since it had its IPO in 2016.
On June 15, it unveiled a quarterly dividend of $1.40 a share, an increase of 32% y/y. It also marked the 11th dividend boost for the firm since its IPO. As a REIT, it is legally forced to give out 90% of its taxable income in the form of dividends. Its increase adjusted funds from operations is a sign it will keep paying dividends.
Author: Blake Ambrose