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As we head into the November midterm elections, states such as Maryland, Missouri, Arkansas, North Dakota and South Dakota are preparing to vote on the legalization of recreational marijuana.

With more states legalizing cannabis for medical and recreational use, here are two high-yielding real estate investment trusts (REITs) to consider:

  • NewLake Capital Partners Inc. NLCP offers a dividend yield of 9.87% or $1.48 per share annually, using quarterly payments, with a track record of increasing its dividends for five consecutive quarters. This internally-managed REIT provides real estate capital to state-licensed cannabis operators through sale-leaseback transactions, third-party purchases and funding for build-to-suit projects. NewLake’s 31 cultivation facilities and dispensaries are leased to single tenants on a triple-net basis. “Subsequent to the quarter, we successfully increased our credit facility from $30 million to $90 million, which will allow us to continue investing in high quality assets,” CEO Anthony Coniglio says.
  • AFC Gamma Inc. AFCG offers a dividend yield of 13.48% or $2.24 per share annually, making quarterly payments, with a decent track record of increasing its dividends once in the past year. The company originates, structures, underwrites and manages senior secured loans and other types of loans for established cannabis industry operators in states that have legalized medicinal and/or adult-use cannabis. AFC Gamma has loan commitments of $483.2 million ($423.1 million of which has been funded) across 12 portfolio companies as of Aug. 1. The September quarterly dividend represents a 30.2% year-over-year dividend increase.

See Also: South Dakota Officials Lash Out Against Legalizing Cannabis, Insisting It Promotes Crime & Violence

Why REITs?

REITs provide strong long-term returns and high-dividend yields. Although rising interest rates are of top concern for many REIT investors, it does not necessarily mean poor returns.

Since the 1970s, there have only been two out of six periods where REITs earned negative total returns — when the 10-Year U.S. Treasury yields rose dramatically.

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