Innovative industrial properties: 5% dividend for cheap for growth!

Let’s keep the first part short: Innovative industrial properties (NASDAQ: AMD) currently has a yield of 5%. If we take the annual dividend of $ 7 and relate it to a stock price of $ 140, we get this value. Granted, even for a REIT, it is far from wrong.

But Innovative Industrial Properties is not just any REIT offering only 5% dividends. No, there is also particularly solid growth. It showed the first quarter again. Let’s look at the numbers and possible track brakes.

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Innovative industrial properties: 5% dividend and more!

Innovative Industrial Properties has delivered really, really solid growth. If we look at the numbers that are now in place, we see that revenue is growing 50% year over year to $ 64.5 million. But net income and funds from operations also grew by 36% and 40% year over year, respectively. However, there is one feature that always slows things down: dilution.

Despite dilution to invest in continued growth, funds from operations per. stock does not look bad. In nominal terms, it rose to $ 1.86 from $ 1.39 a year ago, representing a 33.8% year-on-year growth. On a normalized basis, the value is only marginally higher by 1.87 US dollars. If we take an adjusted value, we would even have funds from operations per. stock above the $ 2 mark to $ 2.04 for the first time. Absolutely intact growth.

Of these funds from operations, Innovative Industrial Properties can easily afford a 5% dividend. Annualized, these numbers would put the FFO per share between $ 7.44 and $ 8.16. This means that an annual dividend of $ 7 is definitely possible. Perhaps more so, after all, the US REIT is still in a state of growth.

Incorrectly priced …?!

To me, Innovative Industrial Properties is definitely wrongly priced at a dividend of 5%. We are currently receiving an evaluation measure that is already very similar to the one in the Corona crash. The price-to-FFO ratio is also currently between 17.2 and 18.8, which is a really favorable valuation target for these growth prospects. Especially since management has recently invested in further acquisitions.

There is another burden. A short seller has condemned cannabis REIT’s business model and expects falling prices. Nevertheless, this valuation is very, very attractive for intact growth at the moment. Foolish investors who are willing to take some risk for strong dividend growth and the chance of marked market-beating returns can certainly take a closer look now.

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Vincent owns shares in Innovative Industrial Properties. The Motley Fool owns shares in and recommends Innovative Industrial Properties.

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