In a world like today that is bombarded with crisis on top of crisis, investors look for options that will make their future secure. Equity investment helps grow your wealth. But that can only happen if a portfolio is carefully designed with smart stocks in growing and stable sectors. Diversification is key to investing.
These three stocks from three different high-growth sectors are the smartest choice to put $1,000 into right now. REIT cannabis company Innovative Industrial Properties ( IIPR 2.84% )California-based tech-related company Pinterest ( PINS -1.44% ), and healthcare and consumer-products giant Johnson & Johnson ( JNJ 1.24% ) are stable companies with high growth prospects. Even a small investment in these stocks can go a long way. Let’s take a look at why.
Innovative Industrial Properties
Not being directly related to the marijuana industry has its perks. Innovative Industrial Properties is not a pure-play cannabis company but rather a real estate investment trust (REIT) that provides capital solutions to the medical cannabis industry. Since pot is still illegal federally, cannabis companies find it hard to set up large production facilities. Innovative acquires these properties and then leases them to the cannabis companies in a sale-leaseback system — in return earning rental income. This business model has proved very successful for the company and is evident from its recent fourth-quarter 2021 results.
Total revenue surged 59% year over year to $59 million, while profit grew to $28.3 million from $21 million in the year-ago period. Looking at the continued impressive performance, analysts expect 2022 total revenue to grow to $204 million, a 74% jump from 2020 levels. The added perk of investing in Innovative is that it is also a dividend-paying stock. As a REIT, the company is legally bound to pay 90% of its net income in return to the shareholder. In the case of a REIT, adjusted funds from operations (AFFO) play the same role as net profits to measure earnings.
And its rising AFFO is an assurance that dividends will continue. In the fourth quarter, AFFO grew to $48.5 million versus $32 million in the year-ago period. It has a dividend yield of 3.1%, much higher than that of the S&P 500 ‘s average of 1.3%
However, besides yield, a good dividend stock is determined by its consistency of dividend payments. In its Q3, Innovative hiked its quarterly dividend payment by 28% year over year to $1.50 per share, that’s also marked its 12th dividend increase since its IPO. The company paid the same quarterly dividend in Q4. Some of the Innovative’s tenants are popular cannabis companies like Cresco Labs, Curaleaf Holdings, and Trulieve Cannabis that are expanding aggressively. As more states keep legalizing marijuana, these companies will continue expanding bringing more business for Innovative. Analysts see an upside of 49% for Innovative’s stock for the next 12 months.
The pandemic boosted this visual-based social media company when people were dependent heavily on social media to tackle the lockdown dilemma. However, now that things are getting back to pre-pandemic times, questions arise about Pinterest’s growth prospects. But its recent Q4 results can soothe investors.
Though the company’s number of global monthly active users (MAUs) declined in the quarter, it continues to grow revenue and profits mostly generated because of advertising. MAU in the U.S. took a major hit of 12%, and globally the number was down 6% from the year-ago quarter, mostly because of “lower traffic coming from search and increasing competition for user attention,” according to management.
Its global average revenue per user (ARPU) grew both in the U.S. and internationally, bringing a total growth of 36% year over year to $1.9 billion. The company recorded a 52% growth in total revenue to $847 million from the year-ago period.
Management also stated the company successfully generated $2 billion in revenue for the full year. The company offers a good advertising platform, offering choices in a range of categories, compared to other social media platforms. I also believe Pinterest is an excellent growth stock because of the company’s efforts in improving its advertising platform, pushing it toward growth. Management stated in the earnings call that besides launching 150 new features in 2021, they are further introducing new formats like the short-form video to enhance Pinners’ experiences.
Analysts see an upside of 63% for Pinterest’s stock for the next 12 months.
Johnson & Johnson
Amid the ongoing pandemic, the importance of healthcare and biotech companies is evident now more than ever. Johnson & Johnson is much more than that — having a diversified business compromising consumer, healthcare, and medical devices gives it an edge over its peers. Its popular consumer brands — like Listerine, Neutrogena, Benadryl, and more — have already captured the market globally.
Because the company’s hand is dipped in three different segments, it is safer in a volatile market, which has helped it report consistent exceptional performance every quarter.
For the full-year 2021, the company recorded $94 billion in sales, a 13.6% year-over-year growth, and adjusted net earnings growth of 22% from 2020 to $26 billion. With a portfolio of quality drugs, its pharmaceuticals segment brought in $52 billion in sales last year. The company is also gearing up to give a tough fight to peer Intuitive Surgical in the robotic-assisted surgery segment, which has been dominating in the space. Johnson & Johnson introduced its robot-assisted surgery system Ottava in November.
The added advantage of investing in this stock — it is a Dividend King, which means it has been paying dividends for the last 59 years. Its consistent dividend payments are proof of how stable and safe this company is. With prospects rising for consumer products, healthcare, and medical device businesses, growth is unstoppable for this company, which is why it is an excellent choice to grow one’s money over the long haul. Analysts see an upside of 18% for Johnson & Johnson’s stock for the next 12 months.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.