by Fred Fuld III
During the last twelve months, many of the cannabis stocks, such as (TLRY) and Canopy Growth (CGC), have been hit hard with some stocks, such a Tilray (TLRY) dropping 76% and Canopy Growth (CGC) down 54%. Some investors and traders think that the marijuana stocks may have hit bottom and there may be some buying opportunities.
However, if you are a relatively conservative investor, you probably want to receive a dividend in return for the risk you are taking. Luckily, there are some cannabis stocks that provide investors with a decent dividend yield.
One example is Scotts Miracle-Gro Company (SMG), which has a couple divisions in the marijuana industry. Its Hawthorne Gardening Company division purchased General Hydroponics which manufactures and sells products for marijuana growers. Scotts has also invested in the hydroponics company AeroGrow International (AERO) which sells products to the small scale grower. Scotts’ current yield is 1.92%. Last August, the company raised its dividend to 58 cents per share, an incense of 5.5% over the previous quarter. The dividend has increased on an annual basis since 2015. The stock has a trailing price to earnings ratio of 15 and a forward PE of 22.
AbbVie Inc. (ABBV) is a seller of Marinol, also known as Dronabinol, a form of tetrahydrocannabinol, one of the main psychoactive ingredients of marijuana. The company has been paying quarterly dividends and has increased the annual dividend every year since 2013. AbbVie’s annual forward dividend yield is 5.77%. The company just raised its dividend to $1.07 per share per quarter, a 9.3% increase. The stock trades at 37 times trailing earnings and 8.5 times forward earnings.
Innovative Industrial Properties Inc. (IIPR), which trades on the New York Stock Exchange, owns, manages, and leases real estate to state licensed cannabis growing businesses. The company has increased dividend every quarter for the last four quarters, the latest dividend increasing my 28%. The company pays a dividend yield of 4.25%. The stock trades at 62 times trailing earnings and 20 times forward earnings.
Horizons Marijuana Life Sciences Index ETF (HMLSF) is an exchange traded fund that invests in many companies involved in the marijuana industry. It has a yield of 12%, based on its latest quarterly payment of $0.202 per share. The reason why the dividend income is so high is because most of the income comes from fees and interest from securities lending. This ETF’s largest holdings are:
- CANOPY GROWTH CORP. 13.42%
- CRONOS GROUP INC. 11.01%
- GW PHARMACEUTICALS PLC. 10.12%
- TILRAY INC. 9.05%
- APHRIA INC. 8.98%
- AURORA CANNABIS INC. 6.51%
- SCOTTS MIRACLE-GRO CO. 6.49%
- CHARLOTTES WEB HOLDINGS INC. 6.21%
- INNOVATIVE INDUSTRIAL PROPERT. 3.11%
- ORGANIGRAM HOLDINGS INC. 2.61%
Altria (MO) is primarily in the tobacco business, as it manufactures and markets cigarettes and smokeless tobacco. The company invested over a billion dollars in Cronos Group (CRON), the Canadian marijuana company. The stock pays a generous yield of 7.0%.
Molson Coors (TAP) is the seventh largest beer maker in the world. The company is in partnership with HEXO (HEXO) to produce cannabis-infused beverages in Canada. Molson Coors yields 4.05%.
Constellation Brands (STZ), which produces and markets beer, wine, and liquor, has a major ownership of shares in the Ontario, Canada based cannabis company Canopy Growth (CGC). Constellation has a dividend yield of 1.56%.
To be blunt about it, here’s the straight dope. Maybe some of these stocks will get high, and give you a smoking portfolio from this budding industry. You may even hit the jack pot. Just make sure you weed out the bad stocks, because if you don’t, your portfolio will take a hit and go up in smoke.
Don’t forget to read:
Exclusive Interview with Chet Billingsley CEO of Mentor Capital on the Marijuana Industry
Is Apple Getting into the Marijuana Industry?
Disclosure: Author owns CGC and IIPR.