2023-04-01 15:30:09 ET
Top Cannabis Stocks For Long-Term Portfolios In 2023
Are you looking to invest long-term in marijuana stocks for 2023? Cannabis REITs, also known as real estate investment trusts, are businesses that own and manage real estate holdings used to grow and manufacture cannabis. These locations might generally contain warehouses, greenhouses, and other manufacturing, processing, and distribution facilities for cannabis products.
In general, cannabis REITs allow investors to invest in the booming cannabis sector without directly participating in firms that manufacture or sell cannabis products. Instead, they may invest in the real estate assets supporting the sector. Real estate investments typically have lower volatility than investments in individual equities, making this a potentially less risky way to invest in the cannabis market.
Long-term cannabis investors get dividend payments from cannabis REITs. At the present time, one of the things luring long-term investors to these cannabis stocks is the relative rarity of dividends in the cannabis sector. Cannabis REITs have provided the strongest dividend increase over the preceding five years, averaging over 20% annually. Cannabis REITs do, however, payout at a higher rate than is typical for the REIT sector, at roughly 70% of their available FFO. If you want to invest long-term in the cannabis sector, let’s look at 3 of the best cannabis stocks to watch for your portfolio.
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Top Cannabis REITs To Watch In April
- Innovative Industrial Properties, Inc. ( NYSE: IIPR )
- AFC Gamma, Inc. ( NASDAQ: AFCG )
- Power REIT ( NYSE: PW )
Innovative Industrial Properties, Inc.
Innovative Industrial Properties, Inc. is an American cannabis-focused real estate investment corporation. The corporation currently has 8.7 million square feet of rentable space, and 2.5 million square feet more will be available soon. With an average lease duration of 16.4 years, the majority of these structures are completely leased. The company now has 111 properties dispersed throughout 19 states. IIP has already spent $2.4 billion on property upgrades as of April, in addition to the additional $227.1 million in anticipated rent payments. In addition, IIP projects that its lease portfolio will grow significantly in 2022 due to its ongoing real estate investments, particularly in Pennsylvania and Massachusetts.
IIPR Latest Results
The company exceeded expectations when it announced its results for the fourth quarter and the entire 2022 year on February 27. IIP’s overall revenue for the fourth quarter of 2022 was close to $70.5 million, up from around $58.9 million for the same period in 2021 by almost 20%. IIP had a 35% growth in overall revenues from 2021 to 2022, from $204.6 million to around $276.4 million.
Additionally, IIP reported FFO (diluted) and FFO (diluted) per diluted share for 2022 of approximately $211.3 million and $7.64, respectively. It also reported net income attributable to common stockholders (diluted) for the year 2022 of roughly $153.0 million. And net income attributable to common stockholders (diluted) per diluted share for the year 2022 of roughly $5.52. IIP paid stockholders of record as of December 30, 2022, a quarterly dividend of $1.80 per common share, or an annualized dividend of $7.20 per share, on January 13, 2023. In Q4 2022, IIP had an AFFO payout ratio of 85%.
In 2022 alone, Innovative Industrial Properties issued $351 million in new common shares to cover the cost of the business’ asset expansion and tenant enhancement initiatives. These issuances dilute equity holders, which naturally lowers share values. The corporation distributed $184 million in dividends. However, in order to meet its lease commitments, the company needs to spend close to $100 million on upgrades promised to tenants. Despite its rising profitability, Innovative Industrial Properties must manage a range of pressures on its cash flow.
IIPR Stock Performance
On March 31 st, IIPR stock closed at $75.99, down 14.05% in the last month of trading. The stock is currently trading in a 52-week price range of $73.25-$208.60, down 25.02% year to date. IIPR stock has a 12-month median price target of $125 per share, according to Tip Ranks analysts. In this forecast, this would be a 64.54% increase over the previous trade price of $75.99.
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AFC Gamma, Inc.
AFC Gamma, Inc. is a well-known cannabis ancillary company with a positive cash flow and competent management. With an emphasis on supply and demand theories, markets for those theories, real estate security, and other sorts of collateral, the company was founded in 2020. First-lien loans, mortgage loans, construction loans, bridge financings, and other unusual forms of financing are some of AFCG’s specializations. The rapidly expanding cannabis market has been the focus of AFC Gamma’s most recent marketing initiatives. Verano Holdings Corp. received a $100 million option as well as a $250 million credit line from the corporation.
AFC Gamma reported a generally accepted accounting principle (“GAAP”) net income of $2.9 million or $0.14 per basic weighted average common share and Distributable Earnings of $12.6 million or $0.62 per basic weighted average common share for the fourth quarter of 2022. The Company reported GAAP net income of $35.9 million or $1.80 per basic weighted average common share and Distributable Earnings of $49.9 million or $2.51 per basic weighted average common share for the full year 2022.
In March, the Company’s Board of Directors declared a regular cash dividend of $0.56 per common share for the first quarter of 2023. Also, the first quarter 2023 dividend will be payable on April 14, 2023, to common shareholders of record as of March 31, 2023.
Words From The CEO
“AFC Gamma ended the year by delivering strong earnings in a difficult macro environment for cannabis and the broader market. Looking forward, we are pleased with our liquidity position, which is generally in-line with our cash position as of December 31, 2022. Our liquidity was enhanced by repayments over the course of 2022 and includes our currently undrawn revolving credit facility. We believe our focus on credit quality, coupled with our ample liquidity, will prove valuable as we look to deploy capital both in commercial real estate assets and state-compliant cannabis operators over the course of 2023.”
Leonard M. Tannenbaum Company’s Chairman and Chief Executive Officer
AFCG Stock Performance
On March 31 st , AFCG shares closed at $12.16, a 21.50 percent decline from the previous trading month. The stock, which has a price range of $11.84 to $10.60, is down 22.70% year to date. Analysts at CNN Business predict that the 12-month average price for AFCG shares will be $19. In comparison to the stock’s most recent trading price of $12.16, this prediction shows a gain of 56.12 percent.
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Power REIT (PW)
Power REIT’s primary objective is to be a real estate investment trust that places a stronger priority on long-term investments with higher risk-adjusted returns. New processing facilities and greenhouses are gradually adding to Power REIT’s portfolio of CEA properties. The lease for the buildings has been taken over by tenants who have been authorized to grow medical marijuana on the property. Power REIT will use the money to finish making the required upgrades to the assets ready for development. Power REIT owns greenhouse facilities with expansion opportunities.
PW reported a core FFO of $0.41 per share for the second quarter of 2022, down from a core FFO of $0.51 for the same period in 2021. In addition, core FFO was $0.41 per share for the quarter ending June 30, 2022, as opposed to $0.40 per share ending March 31, 2022. More than 2.2 million square feet of controlled environment agriculture (CEA) space are now operated by PW through 22 greenhouses. PW has seven ground leases for solar projects totaling 112 kilometers of railroad land and owns 601 acres of REIT Power Series. The Trust paid quarterly dividends on redeemable perpetual preferred stock of about $163,000 ($0.484375 per share).
PW Stock Performance
PW stock closed on March 31 st at $3.7354, down 15.30% for the last month of trading. Currently, the stock has a 52-week price range of $3.15-$40.95 and is up 5.41% year to date.
Marijuana REITs And Long Term 2023 Investments
These could be the best businesses to invest in Cannabis REITs in 2023 . In general, when investing in a company, you should always do your own research. In addition, press releases and financial reports may disclose which companies have the greatest investment opportunities. Investing in a mix of big and small companies and companies could be a strategy for new cannabis investors. If you want to make long-term investments in 2023, these marijuana stocks could be the ones to watch in April.
