Instead of just spending money on cannabis, let it make you some money. There are a handful of cannabis stocks that actually pay dividends. So while you do spend some money upfront to buy the stocks, you can then watch the checks roll in every quarter as dividends get paid. This is especially sweet as the cannabis stock valuations lag. The S&P/TSX Cannabis Index measures cannabis companies trading on the TSX and TSX-V exchanges and this shows stock prices falling 74% over the past year. The last time the Index peaked was February 2021 when it hit a level of 398 and lately, the Index was clocking in at 41. That’s pretty bad no matter how you try to look at it.
However, if you truly believe in the long-term story for the cannabis industry and want to own stocks, it might make sense to get paid while you wait for valuations to recover. Here are four cannabis stocks that pay quarterly dividends:
AFC Gamma (NASDAQ: AFCG) (is an institutional lender that originates, structures, and underwrites senior secured loans and other types of financing to operators in states that have legalized medicinal and/or adult-use cannabis. The company recently reported its earnings and paid a regular quarterly cash dividend of $0.56 per share of common stock to its stockholders of record as of June 30, 2022. The aggregate amount of the regular cash dividend payment of $0.56 per share was approximately $11.1 million, which represented a 47% increase per share compared to the same quarter in 2021. According to Yahoo Finance, AFC Gamma has a dividend yield of 12%. The portfolio’s weighted average yield to maturity was approximately 18% as of June 30, 2022 and 19% as of December 31, 2021. Like other cannabis stocks, the share price is near the 52-week low of $14.90, trading lately at $17.90. However, over the past month, the stock has moved from $15.94 to a recent high of $18.79. Recent buyers are likely to be pretty happy to get both an increase in share price and a dividend.
Innovative Industrial Properties
As a REIT (real estate investment trust), Innovative Industrial Properties (NYSE: IIPR) is expected to deliver a hefty dividend. According to Yahoo Finance, the company’s yield is 7.31%. The company delivered its earnings at the beginning of August and said it paid a quarterly dividend of $1.75 per common share on July 15, 2022 to stockholders of record as of June 30, 2022, representing a 25% increase over the prior year’s second quarter 2021 dividend, equal to an annualized dividend of $7.00 per share. The biggest concern with IIP is its renters and whether they can keep paying rent that is rising as prices for cannabis are falling. One of the company’s tenants Kings Garden has quit paying its rent. It is 8% of the company’s portfolio and IIP is taking them to court over the nonpayment of rent. The company is also greatly exposed to Parallel Cannabis, which has defaulted on some of its debt, but so far sounds like it is paying its rent. Like AFC Gamma, IIP’s stock price has risen over the past month from roughly $92 to $97. Investors will have to decide whether IIP can find new renters to replace failing ones and if those rents will be att he same price.
Turning Point Brands
Turning Point Brands (NYSE: TPB), the owner of ZigZag papers actually pays a dividend – it isn’t huge, but a dividend nonetheless. Yahoo Finance pegs the rate at .96%. Last week the company announced that it would pay a dividend of $0.06 per share on the 7th of October. Including this payment, the dividend yield on the stock will be 1.0%, which is a modest boost for shareholders’ returns. Unlike the previously mentioned companies, TPB’s stock has fallen over the past month from roughly $30 to $23. However, if you are a long-term investor, TPB’s total shareholder return for the last 5 years was 64% and that is way better than what the stock price has accomplished. Turning Point did note in its last earnings release that inflationary pressures were weighing on its consumers, still, the company expects to deliver sales of almost $200 million for the year.
Scotts Miracle-Gro (NYSE: SMG) isn’t a pure play name for cannabis, but it does have a large hydroponics division called Hawthorne. Yahoo calculates the company’s yield at 3.44%. Scotts has announced that it will pay a dividend of $0.66 per share on the 9th of September. However, Scotts has struggled with sales at Hawthorne, and some wonder if the dividend could be in danger if the company can’t make a profit. Still, Scotts has a solid dividend track record which has jumped from an annual total of $1.20 in 2012 to the most recent total annual payment of $2.64. Of course, we all know that past performance does not indicate future results.
The cannabis stocks have taken a beating and there are numerous headwinds still facing the industry. Falling cannabis prices in an industry known for its expensive costs are facing a consumer that is also dealing with inflation challenges. In a positive move, the TSX Cannabis Index has moved up 2.2% over the past month. Still, if you want to take a little risk off the table, these dividend stocks may be just the ticket.