Accumulating $ 1,000 to invest in dividend stocks may not sound significant. However, that amount will buy investors shares of dividend stocks, many of which beat the S&P 500Average cash yield of 1.5%.
Also, some 90% of net income in the form of dividends. Two of these REITs, Innovative Industrial Properties (IIP) (IIPR) 1.57%) and STORE Capital Corporation (STOR -2.07%)will yield more than $ 50 in annual dividend income from a $ 1,000 investment, one that makes each company an excellent choice for income investors.
IIP is the leading “marijuana REIT,” providing facilities for cannabis growers. It owns 109 properties in 19 states that comprise over 8.1 million square feet of space.
The appeal for investors is that, as of the time of this writing. It supports the industry expected to grow at a compound annual growth rate (CAGR) of 26% through 2030, according to Grand View Research. Further, as a real estate company, it avoids the Schedule.
Additionally, Schedule I restrictions make it difficult for marijuana growers to obtain bank loans. IIP can meet the former owner. Although legalization may reduce the number of producers wishing to sell facilities, IIP can also develop its own property.
Such an approach makes it easier to turn a profit. In Q1, revenue of $ 65 million surged 50% from year-ago levels. Also, normalized funds from operations (FFO) income, a measure of a REIT’s cash flow, came up at $ 54 million, up 40%, as rising expenses weighed on profit margins.
Falling cannabis prices in California have taken a toll on the industry. These concerns may explain why the stock has fallen by more than 50% since November.
However, the company pays a dividend of $ 7 per share annually, and thanks to the lower stock price, that amounts to 5.1% at current prices. That payout has risen in three of the last four quarters, the increase of 33% over that period. Given the supply glut abates.
STORE, which stands for “single-tenant operational real estate,” leases single-tenant properties ranging from health clubs to auto-repair facilities to restaurants. It estimates its addressable market is around 2 million properties with a $ 3.9 trillion market value. Hence, at just under 3,000 locations, STORE comprises only a tiny fraction of its addressable market.
Admittedly, the company could face some pain if it was unable to meet lease obligations. However, the REIT uses a triple net-lease model that abates much of the risk.
This model requires the tenant to pay the taxes, insurance, maintenance, and updating costs associated with the buildings. The arrangement gives investors the income related to these properties without much of the expenses of real estate investing.
Small investors can afford to buy into this stock, which trades at under $ 30 per share. Moreover, in 2017, the company attracted prominent back in the form of Warren Buffett’s Berkshire Hathaway. Buffett’s 24.4 million shares make up almost 9% of the outstanding shares.
STORE has dropped over the last year amid a generalized sell-off. Still, one can understand Buffett’s interest, considering the financials. In Q1, it reported just over $ 222 million in revenue, 22% more than in the year-ago quarter. This led to $ 158 million in adjusted funds from operations (AFFO) income, a 26% increase over the same period, which is mainly due to a reduction in expenses.
STORE can cover the $ 108 million in dividend costs, thanks to that AFFO income. At $ 1.54 per share, its payout yields 5.6%, and that dividend has risen every year since it started payouts in 2015.
Finally, with a similar price increase to 12, STORE increases the likelihood that its stock will recover.