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What Innovative Industrial Properties’ (IIPR) New Dividends Could Mean for this Stock

Today Innovative Industrial Properties, Inc. (IIPR) declared a Q4 2019 dividend of $1.00 per share of common stock, equating to an approximate 28% increase above the company's Q3 2019 dividend of $0.78 per share, and about a 186% increase above its Q4 2018 dividend of $0.35 per share. IIPR is the first and only REIT on the New York Stock Exchange to specialize in the legal U.S. cannabis industry. This dividend is the sixth dividend increase since the company's IPO back in December 2016, and breaks down to an annualized dividend of $4.00 per common share.  As for the company's 9.00% Series A Cumulative Redeemable Preferred Stock, IIPR has also declared a regular quarterly dividend of $0.5625 per share, which will be payable on January 15, 2020 to stockholders of record at the close of business on December 31, 2019.  Innovative Industrial Properties, Inc. seems to be outperforming its peers in the Finance sector this year. Looking at the most recent data, the company has returned 70.54% so far, versus the Finance sector's average of 18.13% on a year-to-date basis.  It also appears that IIPR is outperforming its peers in the REIT and Equity Trust category, which comparatively has only gained an average of 25.71% so far this year. Innovative Industrial Properties, Inc. has a market capitalization of $926m. The company has increased its earnings per share (EPS) by an average of 174% per year, throughout the last three years (using a line of best fit). It also grew revenue 159% during the last year. Throughout the past 3 years, IIPR has delivered a total shareholder return of 369%. IIPR is a self-advised Maryland corporation focused on the acquisition, ownership and management of regulated medical-use marijuana facilities. The company partners with industrial properties that are leased to qualified, state-licensed operators. The company partners with cannabis operators by supplying them with capital via the acquisition and lease-back of their real estate assets, as well as offering other creative real estate-based capital solutions. Innovative Industrial Properties, Inc. owns 29 properties across Arizona, California, Colorado, Illinois, Maryland, Massachusetts, Michigan, Minnesota, New York, Nevada, Ohio and Pennsylvania.  These properties total roughly 2.1 million rentable square feet, which are 100% leased with a weighted-average remaining lease term of about 15.8 years. IIPR is also one of few cannabis stocks that issues dividend payments to its shareholders. As a REIT, the company is required to distribute 90% of taxable income to shareholders in the form of dividend payments. According to the company website, "Our national portfolio is comprised of specialized industrial and greenhouse buildings, 100% leased to state-licensed medical-use cannabis growers. These facilities are mission-critical for our operators and well located in states with robust medical-use regulatory environments."  
Innovative Industrial Properties Inc. (IIPR) rose $0.20 (+0.27%) in after-hours trading Tuesday. Year-to-date, IIPR has gained 131.56%, versus a 17.96% rise in the benchmark S&P 500 index during the same period.

About the Author: Eric Bowler

eric-bowlerEric Bowler is an accomplished journalist providing in-depth insights for more than two decades. Over the past several years his focus has been on the marijuana industry, with a special interest in cannabis growth stocks. His daily coverage of the industry keeps him on top of the key trends with the goal of helping investors make well-informed decisions.
NYSE:MJ December 10, 2019 4:55pm

Don’t Expect Lower Oil Prices Anytime Soon

NYSE:USO December 10, 2019 12:23pm

Silver Price Forecast: Investors Should Be Bearish

NYSE:SLV December 10, 2019 10:32am

What Caused Today’s Rally in Cannabis Stocks?

NYSE:MJ December 9, 2019 5:41pm

Natural Gas Prices Plunge, Where’s it Headed Next?

NYSE:UNG December 9, 2019 12:33pm

Silver Drops 2%, Is It Headed Even Lower?

silver stock bars

Today we saw silver (SLV) drop more than 2% and I believe it is still difficult to have high conviction that the lows are in at $16.50/oz. This is divergent from the action we see in gold (GLD), where sentiment is near May levels, and we've seen small speculators shed a significant amount of long contracts despite a more modest drop. Let's take a closer look below:

(Source: Author's Chart)

As we can see from the chart of silver with small speculator positioning, we can see that the silver price tends to perform the best when the small speculators are net short or flat. From early May to mid-June, small speculators had their lowest long positions in months, and the price of silver shot up 10% in less than a month. The blue bars in the above chart represent this positioning, while the silver line represents the silver price. One could argue that we saw a similarly strong move in price while small speculators were at their highest levels in early August, and this is true; however, there's one key difference. While the sharp rally of 10% in a month from early May to mid-June held all of its gains and has not been revisited, the sharp rally in early August has fizzled out completely. Therefore, if one is positioning from an investment standpoint and not from a short-term swing-trading perspective, this makes a massive difference.

The recent dip in silver prices saw small speculator positioning drop to 37,500 contracts, and this was a positive sign. However, despite the silver price going sideways the past two weeks, we've now seen small speculators add back all the contracts they sold out on the drop. This suggests that the bulls are getting more confident despite no move higher for the price of silver, and this isn't generally a great sign. This applies in the opposite direction as well, if silver prices were going up and no one was getting bullish, this would be a great sign - suggesting there was skepticism about the rally.

If we move over to sentiment for silver, we also see more of the same. Bullish sentiment collapsed from 95% bulls down to 50% bulls but continues to hover near the 60% bulls level currently. This means that despite silver being more than 10% off of its highs, we still have more bulls than bears. For me to have more conviction that the lows are in, I'd want to see small speculator positioning drop to below 30,000 contracts and bullish sentiment drop below 40%. Currently, neither of these two things has been satisfied.

A picture containing map, linedrawing Description automatically generated

(Source: Daily Sentiment Index Data, Author's Chart)

Finally, looking at the price chart below, we can see that the $16.20/oz level represents a small gap on the Silver ETF, and I would say it has at least a 50% chance of being filled. This gap-fill would likely force anyone long silver to begin to rethink their positions considerably, and this is a much lower risk entry than current levels. As it sits right now, we have resistance at $18.25/oz, and we remain below the short-term downtrend line off the September highs.

A screenshot of a computer Description automatically generated


While it is possible that silver bottoms without these conditions being met, I would be very inclined to sell silver if it heads back towards the $19.50/oz level if this occurs. This is because bullish sentiment would likely be hitting mania levels once again above $19.00/oz if we already see minor complacency while silver is meandering around near its lows. In summary, I believe the $16.20/oz level represents a low-risk area to go long silver, and I would be a seller above $19.50/oz. Time will tell where the market heads first, but I am still enamored with the setup in silver currently from a reward to risk standpoint.

The iShares Silver Trust (SLV) was trading at $15.47 per share on Friday afternoon, down $0.38 (-2.40%). Year-to-date, SLV has declined -3.25%, versus a 18.55% rise in the benchmark S&P 500 index during the same period. SLV currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #9 of 33 ETFs in the Precious Metals ETFs category.

About the Author: Taylor Dart

taylor-dartTaylor Dart has over 10 years of experience in active & passive investing specializing in mid-cap growth stocks, as well as the precious metals sector. He has been writing on Seeking Alpha for four years, and managing his own portfolios since 2008. His main focus is on growth stocks outperforming the market and their peers. In addition to looking at the fundamentals, he uses different timing models for industry groups, and scans upwards of 2000 stocks daily to identify the best fundamental opportunities with the timeliest technical setups. Taylor is a huge proponent of Trend Following and the "Turtles" who enjoyed compound annual growth rates of over 50 percent per year.
NYSE:GLD December 6, 2019 12:38pm

A Bullish Short-term Sign for Natural Gas

NYSE:UNG December 5, 2019 4:54pm

What Aphria’s (APHA) $80 million Financing Could Mean for This Stock

NYSE:MJ December 5, 2019 11:20am

Gold Prices Rise Amid Global Trade Concerns

gold investment bars
We've said it before and we'll say it again: Uncertainty is good for gold prices. If, of course, "good" means "higher".
NYSE:GLD December 4, 2019 10:39am

What Does Aurora Cannabis’ CBD Approval Mean for the Stock?                   

NYSE:MJ December 3, 2019 4:52pm

Why I Continue to Remain Bullish on Gold

NYSE:GDX December 3, 2019 12:41pm

Why Is Silver Rallying Today?

Once again defying skeptics, silver popped overnight on news that China is delaying trade talks. President Trump, in typical fashion, immediately went on the offensive saying it might be better to wait until after the US election to hammer out a deal.
NYSE:SLV December 3, 2019 9:46am

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