Innovative Industrial Properties Navigates Headwinds by Leveraging Its Strengths

Innovative Industrial Properties, Inc. (NYSE:IIPR) is one of the Best REIT Dividend Stocks to Buy in 2025.

The company focuses on cannabis-related facilities, mainly grow houses, and operates under a net lease model where tenants handle most property expenses. As the cannabis industry shifts from rapid growth to consolidation, some tenants are struggling to pay rent. Despite these challenges, IIPR has managed to navigate the headwinds fairly well.

One of Innovative Industrial Properties, Inc. (NYSE:IIPR)’s main strengths is its solid balance sheet, with a low debt ratio of 0.15, well below industry averages. This low leverage gives the company flexibility to expand its portfolio and support its dividend.

From 2017 to 2024, its average AFFO payout ratio was around 85%, which is on the higher side for a net lease REIT. A recent lease adjustment with a major tenant is expected to reduce FFO by $0.16 per share, potentially pushing the payout ratio slightly above 90% in 2025. This makes Innovative Industrial Properties, Inc. (NYSE:IIPR)’s strong financial position even more important and helps justify its dividend yield of over 13%.

Innovative Industrial Properties, Inc. (NYSE:IIPR) currently offers a quarterly dividend of $1.90 per share and has been growing its payouts for eight consecutive years.

While we acknowledge the potential of IIPR as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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