(Image Credit - Nick Youngson)
When most people think of marijuana stocks, the last thing they think of is dividends. Now, for the most part, this is an accurate characterization. The legal marijuana industry is still very young, and new companies in growing industries need money to expand. Therefore, they just don't have excess capital to pay out as dividends yet.
This doesn't instantly make them bad investments (duh!), it just means that as a shareholder you are hoping to make money through capital appreciation (a rising stock price) as opposed to dividend income in the near term.
That said, some investors love dividend stocks, they are hard not to love, and lucky for those investors there are a few stocks in the cannabis space that pay dividends or that have paid them in the past.
Abbvie Inc. (NYSE:ABBV)
Abbvie Inc., manufacturer of Marinol (dronabinol), has been paying quarterly dividends consistently since the company was spun out of Abbott Labs in 2013. At the time of this writing, Abbvie's annual dividend yield was 3.84%. The company's most recent dividend was $0.64/share and was paid on May 15th.
Associated British Foods Plc. (LON:ABF)(OTC:ASBFY)
Although Associated British Food's main business is the processing and manufacturing of food, their wholly-owned subsidiary British Sugar cultivates cannabis for the production of GW Pharmaceutical’s Epidiolex. The company has been paying semi-annual dividends consistently (as is British custom, versus the U.S. standard; quarterly payments) for at least the last 17 years. At the time of this writing, Associated British Food's annual dividend yield was 1.17%. The company's most recent dividend was £0.2645/share (~$0.34) and was paid on January 13th.
Compass Diversified Holdings Inc. (NYSE:CODI)
Compass Diversified Holdings owns a majority interest in hemp food producer, Manitoba Harvest. At the time of this writing, Compass Diversified Holdings' annual dividend yield was 8.83%. The company's most recent dividend of $0.36 was paid on April 27th.
Innovative Industrial Properties Inc. (NYSE:IIPR)
NYSE-Listed cannabis REIT, Innovative Industrial Properties just announced the company's first dividend payment of $0.15 on May 30th. REITs are commonly associated with dividends because they are generally required to pay them to retain their tax status as a REIT. Unlike other companies that are subject to double taxation (meaning earnings are taxed at the corporate level, and taxed again when investors get them as dividends), REITs generally don't pay corporate income tax as long as they pay out at least 90% of their taxable income as dividends. This means the income is only taxed once. Shareholders pay income and/or capital gains taxes on their REIT dividends depending on the nature of the income from the REIT.
In order to maintain the company's tax status as a REIT one would be inclined to think that when Kalyx completes its reverse merger with Atlantic Alliance Partnership Corp. (NASDAQ:AAPC), a dividend would be in order. That said, we cannot speculate on future dividends (nor the completion of the reverse merger transaction).
Invictus MD Strategies Corp. (TSXV:IMH)(OTC:IVITF)
Invictus MD Strategies Corp. doesn't have a regular dividend, but we included it here because the company has paid one in the past. In the fall of 2016, Invictus MD paid a $1,000,000 CAD dividend (~0.108/share) after profitably exciting some investments.
Iwasaki Electric Co. Ltd. (JPX:6924)
Iwasaki Electric Co., LTD. is an electronics company focused on lighting and specialized lighting applications. Iwasaki Electric's wholly-owned subsidiary, Eye Hortilux is a designer, manufacturer, and marketer of grow lights targeted at cannabis cultivators and more. At the time of this writing, Iwasaki Electric's most recent dividend was 4¥/share (~$0.04 USD) and was paid at the end of the company's fiscal year in March. Based on this, the company's annual dividend yield is ~2.28%.
Scotts Miracle-Gro Company (NYSE:SMG)
Scotts Miracle-Gro is helping gardeners with a different kind of 'grass' - marijuana. Although the company doesn't 'touch the plant', Scotts has invested heavily in the space. In 2015, the company's Hawthorne Gardening Co., subsidiary purchased General Hydroponics. Scotts Miracle-Gro also has a significant stake in the desktop hydroponics company, AeroGrow International (OTC:AERO). At the time of this writing, Scotts Miracle-Gro's most recent dividend is $0.50/share and is payable on June 9th. The company's annual dividend yield is 2.28%.
We hope to see more marijuana related stocks paying dividends, as increasing numbers of companies in the space attain consistent profitability. In the meantime, learn more about the companies above by checking out their marijuana stock profiles through the linked tickers above where you can view a custom stock chart, recent news and more.
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