It started to become popular as the cannabis industry became much more mainstream. Many startups can’t afford to pay dividends while trying to stabilize their business models. But as these companies became profitable, some began paying dividends to shareholders.
There aren’t many cannabis stocks that pay dividends. The industry is very new and young. And because dividends represent the distribution of company profits to shareholders, few pay dividends. However, old big companies are willing to pay dividends. In this post, we talked about companies that pay dividends.
In recent years, cannabis stocks have become a very good option among investors, with the medical and recreational legalization of cannabis in most places. But while most cannabis stocks offer strong returns, few pay dividends. dividend for a stock trader; It is the amount decided to be distributed to the shareholders over the annual net profit of the company of which it is a shareholder. But of course, that started to change as the cannabis industry became much more mainstream. Few pay dividends because startups have yet to make a profit. Also, the presence of Pot stocks and irregularity affects this.
There is less volatility in stocks in companies such as Altria Group, Scotts Miracle-Gro, Innovative Industrial Properties, Compass Diversified Holdings Inc., AbbVie Inc., Constellation Brands, Imperial Brands. And these companies are among the top companies that pay dividends. This is because, despite their exposure to the cannabis industry, they are diversified to withstand temporary shocks in the industry. As the cannabis industry grows, more stocks in this industry are likely to start paying dividends.
What Is Dividend ?
The dividend is the right to receive a share of the profits. Dividend for a stock market investor; It is the amount decided to be distributed to the shareholders over the annual net profit of the company of which it is a shareholder. Dividends can be distributed in cash or as bonus shares. When a company decides to increase the capital by a bonus issue, it distributes the dividend as shares. Payment can be made in cash or installments. Shares can be distributed to shareholders, members of the board of directors, and partnership employees, apart from company partners. However, the shareholders must take the place of the dividend first. In addition, it cannot exceed one-quarter of the dividend distributed to the shareholders.
Companies traded in the stock exchange may not distribute dividends even if they have made a profit in the relevant period. Some companies traditionally distribute dividends, as well as companies that decide not to distribute dividends. The dividend decision is taken at the general assembly of the company upon the proposal of the board of directors. In partnerships traded on the stock exchange, dividends are distributed to all shareholders in proportion to their shares. To receive a dividend, you must have the share certificate in your hand on the day the dividend is paid.
Cannabis Stocks That Pay Dividends
In recent years, cannabis has been legalized for recreational and medical use in most countries of the world. As a result, there has been a lot of hype around cannabis stocks among investors. but while most cannabis stocks are delivering strong returns, few pay dividends.
Of course, that started to change as the cannabis industry became much more mainstream. Many startups cannot afford to pay dividends as they try to stabilize their business model. This was exactly the case for many of the world’s leading cannabis companies until recently. As these companies become profitable, some begin to pay dividends to shareholders.
There aren’t many cannabis stocks that pay dividends. The industry is very new and young. Also, many companies in the cannabis industry are yet to make a profit. And because dividends represent the distribution of company profits to shareholders, very few pay dividends.
The presence of pot stocks is uneven. The ups have been huge. So are the downs. This is expected in a growing industry. rapid price fluctuations missed many smart coins. The uncertainty and lack of stability have been a cause for fear for some investors.
For starters, cannabis has had a huge economic impact. And this effect is only expected to increase. According to the Marijuana Business Factbook, in 2019, cannabis had an estimated $40 billion impact in the United States. It will make some people very rich. And in the meantime, many new and fledgling cannabis companies will go under. According to the Small Business Association, 30% of new businesses fail within the first two years of opening.
In this article, we’ve rounded up dividend-paying cannabis stocks. Not all are cannabis producers, but they are all involved in some form of the cannabis industry. These stocks can be part of a solid income investment strategy and also have the potential to deliver solid returns over the long term.
There is less fluctuation in the stocks listed below. This is because, despite their exposure to the cannabis industry, they have been diversified to withstand temporary shocks in the industry. As the cannabis industry grows, more stocks in this industry are likely to start paying dividends. Many people turn to cannabis products for medical treatment or simply for relaxation. This is an industry that will grow over time, and there are many opportunities for income investors if you know where to look.
- Altria Group
- Scotts Miracle-Gro
- Innovative Industrial Properties
- Compass Diversified Holdings Inc.
- AbbVie Inc.
- Constellation Brands
- Imperial Brands
Altria is one of the world’s largest tobacco producers but is fast becoming one of the most influential cannabis companies. He owns a large stake in a multinational cannabis company. And more recently, it has been successfully throwing its weight in lobbying for the legalization of marijuana.
Most investors know Altria Group as the owner of Philip Morris USA, the company that manufactures Marlboro cigarettes. But they also own a 45 % stake in Cronos Group, a Canadian cannabis company. While Cronos Group has its own listing on the NASDAQ, investing in Altria Group is a better option for dividend-focused investors.
Cronos Group currently operates six different brands of cannabis and CBD. These include Lord Jones, which caters to the luxury market, and Cove and Peace Naturals, which caters to the health and wellness market.
The manufacturer of Marlboro cigarettes has a lot of exposure to the cannabis industry. And he takes advantage of that very well. The real reason why Cannabis dividend stock is so attractive is that it’s the dividend king. Altria has increased its annual dividend for over 50 years. This is a difficult level of stability. And it’s something that makes this marijuana stock that pays dividends hard to ignore.
Scotts Miracle-Gro stock has been performing well for years. But the company took things to a new level when it bought the Hawthorne Gardening Company. While Scotts Miracle-Gro is not a stock of cannabis in the usual sense, its products have become indispensable to the cannabis industry.
They have a broad portfolio of garden and pest control products. Marijuana growers use these products to increase their yield. Scotts Miracle-Gro is also involved in hydroponics, an agricultural technique that many cannabis companies use to increase their yields.
This subsidiary of Scotts (Hawthorne Gardening Company) has long been considered the standard for hydroponic growers. This is notable because the majority of hydroponic cultivation is dedicated to cannabis. And cannabis growers love hydroponics.
Hawthorn scores plus points for making its general manager one of High Times’ most influential people in cannabis. But the real reason the company is rated higher is that this marijuana stock pays dividends. And that dividend yield has been growing steadily for years. This makes Scotts one of the best marijuana dividend stocks on the market.
Scotts Miracle-Gro stock performed very well in the second half of 2020 and early 2021. Share prices have risen more than 250 % since hitting their lowest level in March 2020. They also currently pay a 1.15 % dividend.
Innovative Industrial Properties and Compass Diversified Holdings Inc.
Innovative Industrial Properties is a Real Estate Investment Trust, or REIT, that owns medical marijuana properties throughout the United States. Most of their properties consist of greenhouses or other industrial properties specifically for cannabis brands. IIPR often buys and leases back these greenhouses directly from cannabis companies. The sale helps the cannabis company get off the ground, and the lease gives IIPR a steady stream of revenue for years to come.
The common denominator between REITs is the payment of rental income and capital gains in the form of dividends. And REITs are encouraged to do so because they do not pay certain taxes as long as 90% of taxable income is paid as dividends. Innovative is a specialist among REITs because it focuses on renting properties to experienced, state-licensed operators of medical-use cannabis facilities.
Also, REITs are a great option for income investors. That’s because they are legally required to return a large portion of their income to their shareholders as dividends. Currently, the dividend yield of Innovative Industrial Property is 2.6%.
This stock has been providing strong returns in recent months as well. Share prices have recovered slowly but steadily since November 2020. This is likely due to strong earnings reports that have shown solid year-over-year growth over the past few quarters.
On the other hand, Compass partners with management teams to acquire mid-market businesses operating in the Cannabis industry. Now, Compass has sold its stake in Manitoba Harvest, a cannabis food company, for an impressive profit. The holding company also gained a lot of Tilray shares in the process.
While both have strong positions in the cannabis industry, it’s their impressive dividend yield that makes them valuable. Innovative has an increasing dividend yield of 2.3%. And Compass has a steady 6.1% return. This makes both of these diversified investments strong marijuana stocks that pay dividends.
AbbVie is a biopharmaceutical company. It also has a long history. They were founded in 2013 as a spin-off of Abbott Laboratories. Abbott Laboratories is a Chicago medical company dating back to the late 19th century.
They have a drug on the market that uses a synthetic form of THC. This drug is called Marinol. Marinol was AbbVie’s first FDA-approved cannabis drug, a synthetic version of THC. And is a popular anti-nausea treatment for chemotherapy patients. Many doctors also prescribe it for AIDS patients struggling with loss of appetite. (It is used as an appetite stimulant for those suffering from cancer, HIV, and anorexia, among others.)
The greatest success of this drug is indicative of the future of medical marijuana. While there is still a lot of research to be done, it is clear that when used correctly, cannabis can help people with chronic conditions lead a much more comfortable life.
When Marinol’s price dropped, AbbVie sold it to Alkem Laboratories in 2019. Today, AbbVie is not in the manufacture or distribution of any cannabis treatments. But it currently holds the most cannabis patents in the US. As such, AbbVie’s intellectual property will make it a major player in the industry for years to come. That makes AbbVie one of our favorite dividend-paying marijuana stocks. It also has an impressive 4.9% efficiency.
Constellation Brands is an alcohol producer. They produce major wine, beer, and liquor brands such as Corona, Robert Mondavi, and Svedka. However, Constellation Brands also has a large stake in Canopy Growth (CGC).
Canopy Growth is a Canadian cannabis company that produces both THC and CBD products. They have a broad portfolio of sixteen brands that cater to different segments of the cannabis market. Some of its most popular brands include Tweed, an accessible entertainment brand, and Spectrum Therapeutics, a medical brand.
Like Cronos Group, Canopy Growth has its stock. But investing in Constellation Brands is a better way for income investors to capitalize on this stock. Currently, Constellation Brands’ dividend yield is 1.4%.
Constellation Brands’ stock has also been improving significantly over the past few months. They have fully recovered from the lows of the COVID-19 pandemic and their stock hit a five-year high in February 2021. Constellation Brands also has a very broad, diverse portfolio, making it a relatively stable investment option.
Imperial Brands is another tobacco company with dividend-paying cannabis connections. The company invested in British medical cannabis research firm Oxford Cannabinoid Technologies in 2018. In 2019, the company acquired a minority stake in Canadian cannabis company Auxly Cannabis.
These cannabis investments have so far not made any money for Imperial Brands. But the company’s core tobacco business kept its dividends flowing. Imperial’s dividend is currently yielding around 5.4%.
Still, Imperial Brands’ dividend program is under pressure. The company cut its dividend by a third. Imperial’s earnings plummeted. Like Altria, it faces uncertainty regarding e-cigarettes. On top of that, the company expects some headwinds related to the COVID-19 outbreak, particularly in its duty-free and travel retail business.