While most marijuana stocks still look to turn a substantial profit, certain “pick and shovel” plays do just that while skirting the prohibition issues that torment most of the cannabis industry. Moreover, with some “pick and shovel” plays, pot stock investors have an opportunity to earn a return in the form of dividends. It is a unique chance for cannabis stock investors to reinvest in these companies and gain an even more substantial return in a still-growing market.
These are the top two marijuana stock dividend plays on the market today (plus one out of left field):
Scotts Miracle-Gro Company
A household name among the weekend weed and feed crowd, Scotts Miracle-Gro Co. (NYSE:SMG) is a global leader in lawn and garden circles with seemingly little correlation to the average marijuana stock pick. The company’s revenues come primarily from grass seed, fertilizer, pesticide, and dirt -- an empire built on the back of the big box store revolution led by the likes of Home Depot and Lowe's.
All of that changed in 2013 when after years of sputtering revenues following The Great Recession, CEO Jim Hagedorn took a risk and transformed the 150-year old company into a pot stock play with a punch. "For a lot of conventional companies, I don't think they'd want to take the risk," Hagedorn said in an interview with Forbes. "I mean I've talked to some other friends and CEOs who basically shake their head."
Scotts owns companies that deal in specialized soil and fertilizer for cannabis growers. Moreover, they have a 75 percent stake in hydroponics equipment company Gavita International. With the hydroponics markets set to grow to $24 billion this year alone, weed stocks investors would be wise to trust Hagedorn’s judgment.
By 2016, Scott’s hydroponics revenues were upwards of $250 million per year, with prospects in the space only looking positive for this miracle weed stock. Currently trading at $85 per share, the company pays a 2.16 percent dividend yield. Moreover, they have been growing their dividend for the past seven years consistently.
Far from a traditional marijuana stock play, Scott’s Miracle-Gro is one of the top cannabis dividend stocks to buy right now.
Debateable to some, it is hard to argue the status of AbbVie Inc. (NYSE:ABBV) as marijuana stock pick based on the company’s output. Most notably, they are known for Marinol, a dronabinol capsule identical to tetrahydrocannabinol (THC). According to the company Marinol “ help[s] manage loss of appetite associated with weight loss in patients with acquired immune deficiency syndrome (AIDS)."
The drug also helps with "nausea and vomiting associated with cancer chemotherapy in patients who have failed to respond adequately to conventional treatment to relieve nausea and vomiting."
Moreover, according to the Daily Marijuana Observer, Abbvie has a long list of cannabinoid-related patents in their portfolio, including:
- U.S. Patent 12967275: A method for treating cannabinoid receptor-related diseases with cannabinoid receptor ligands
- U.S. Patent 12969047: A process to prepare cannabinoid receptor ligands
- European Patent 20080840052: A combination therapy that curbs side effects with cannabinoid receptor ligands
The company shows double-digit growth with exponentially increasing dividends. In fact, earlier this year they increased their quarterly dividends by 35 percent, a total increase of 140 percent since their 2013 IPO.
The current sales outlook for Abbvie is 13 percent with a dividend yield of 3.2 percent, making this a marijuana stock play to grab immediately.
And For More Dividends
Although Constellation Brands Inc. (NYSE:STZ) is a beverage company, their recent buy-in of Canopy Growth Corp. (TSX:WEED), a 9.9 percent stake, turned the cannabis industry upside down and made this company a weed stock from left field.
Late last year, Constellation paid out a quarterly dividend of 52 cents per share. At the time giving them a dividend yield of 0.95 percent. Moreover, the company’s dividend increases approximately 25 percent every spring.