IIPR stock has been making big gains since the beginning of this year and outperformed the broader cannabis space.
There are a few cannabis stocks that have been on a tear even though the wider industry has been on a consolidation phase. However, Innovative Industrial Properties Inc (NYSE:IIPR) has truly been on a different plane altogether for much of 2019, and over the course of the year, IIPR stock has gained as much as 165%.
Dividend Paying Stock
Not only has Innovative Industrial Properties climbed at a highly impressive clip, but it has also paid out hefty dividends to its investors, and that has probably been one of the bigger reasons behind IIPR's successful stock performance. However, there are many experts who have asked investors to be cautious about investing in the company, and that is because of the very nature of its business.
As the name suggests, the company is an innovative one, and that has been the primary reason behind its rise in the cannabis space. It has brought the business of a real investment trust (REIT) into a nascent industry and reaped the benefits considerably.
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IIPR stock is down 1% at $127.15 in Friday's trading session.
Additionally, IIPR has also managed to grow the number of properties under its control from 11 to 22. However, it is important to note that although the company has managed to keep its costs stable, it will only be able to generate more income if it takes over more and more production properties. Consequently, the dividend will grow as well.
Such an approach will require more capital, and since the company pays out most of its profits to its investors as dividends, it would have to go for common stock offerings to be able to do so. If that is to be the approach, then it is going to erode the value of the shares that an investor already has. This is why many experts have asked people to be cautious.
In addition to that, at the pace IIPR is acquiring properties, it might not be that long before it needs to go for common stock offerings.
IIPR stock recently made an all-time high of $137.78 and is up over 230% from its 52-week low of $31.61.
Featured image: DepositPhotos © sbotas
