{"id":16224,"date":"2025-06-05T08:30:43","date_gmt":"2025-06-05T08:30:43","guid":{"rendered":"https:\/\/finderica.com\/?p=16224"},"modified":"2025-06-05T08:30:43","modified_gmt":"2025-06-05T08:30:43","slug":"innovative-industrial-properties-puts-the-high-in-high-yield","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=16224","title":{"rendered":"Innovative Industrial Properties Puts the \u201cHigh\u201d in High Yield"},"content":{"rendered":"
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We last looked at Innovative Industrial Properties<\/strong> (NYSE: IIPR) in Safety Net 11 months ago. At the time, the real estate investment trust was yielding 7% and received an \u201cA\u201d for dividend safety.<\/p>\n

Since then, the company has maintained its quarterly dividend at $1.90.<\/p>\n

While the dividend has remained stable, the same can\u2019t be said for the stock price. It\u2019s been cut in half in the past year.<\/p>\n

That has jacked the yield all the way up to 13.6%.<\/p>\n

Can Innovative Industrial Properties keep paying this double-digit yield?<\/p>\n

When we last evaluated the landlord to cannabis operators, it was steadily growing its funds from operations (FFO), which is the measure of cash flow used by REITs.<\/p>\n

It was estimated that the company would bring in $250 million in FFO last year. Instead, FFO totaled $231 million. This is important \u2013 not because it fell short of the estimate, but because it was slightly lower than 2023\u2019s figure of $232 million.<\/p>\n

Lower FFO earns a company a one-grade penalty in the Safety Net model.<\/p>\n

Making matters worse, FFO is forecast to decline again this year to $191 million.<\/p>\n

That will cost Innovative Industrial Properties another point toward its Safety Net rating.<\/p>\n

And the bad news continues\u2026 If the company\u2019s FFO in 2025 is just $191 million, it won\u2019t be enough to cover the expected $211 million in dividends. (I raise my payout ratio threshold from 75% to 100% for REITs, because they are required to pay out the vast majority of their earnings to shareholders. But even with the adjustment, Innovative Industrial\u2019s 110% payout ratio is still too high.)<\/p>\n

\"Chart:<\/a><\/p>\n

<\/a>So that\u2019s yet another downgrade.<\/p>\n

Now, the company has boosted its dividend every year for nine straight years. That\u2019s a solid track record that I\u2019m sure it would like to extend. But it can\u2019t afford to at the moment.<\/p>\n

If Innovative Industrial Properties is able to get FFO growth moving in the right direction again, that would be a big plus. But until then, the dividend is at risk of being cut.<\/p>\n

Dividend Safety Rating: D<\/strong><\/p>\n

\"Dividend<\/p>\n

What stock\u2019s dividend safety would you like me to analyze next? Leave the ticker in the comments section.<\/p>\n

You can also take a look to see whether we\u2019ve written about your favorite stock recently. Just click on the word \u201cSearch\u201d at the top right part of the Wealthy Retirement<\/em> homepage, type in the company name, and hit \u201cEnter.\u201d<\/p>\n

Also, keep in mind that Safety Net can analyze only individual stocks, not exchange-traded funds, mutual funds, or closed-end funds.<\/p>\n<\/p><\/div>\n