12 consumer goods & bio-pharmaceutical companies have indirect exposure to the marijuana sector, pay dividends and have below-average beta scores. Perhaps one or more of them warrant your investment consideration as opposed to investing in the extremely volatile pure-play cannabis market. Here’s why:
By Lorimer Wilson
1. AbbVie Inc. (NYSE: ABBV)
AbbVie has introduced a FDA-approved marijuana-based drug called Marinol that is used for the treatment of nausea and vomiting in patients enduring chemotherapy and for increasing appetite in patients with HIV/AIDS or certain cancers. It has a beta of 0.97, a dividend yield of 5.7% and its stock went up 15.2% in September.
2. Altria Group Inc. (NYSE: MO)
Altria has entered the marijuana sector with an investment of $1.8B in Cronos Group Inc (Nasdaq:CRON) given that cigarette usage is declining in the U.S. and marijuana decriminalization is starting to take hold. This stake will allow Altria to expand rapidly into the marijuana space, if and when marijuana gets legalized in the U.S. on the federal level. It has a beta of 0.39, a dividend yield of 8.1% and its stock went down 6.5% in September.
3. Associated British Foods (OTCPK: ASBFY)
Associated British Foods has the potential to introduce marijuana-containing products snacks and beverages. and has already ventured into the marijuana industry by becoming a marijuana cultivator and supplier to the medical industry. It has a beta of 0.95, a dividend yield of 0.9% and its stock went up 1.9% in September.
4. Constellation Brands, Inc. (NYSE: STZ)
Constellation Brands has invested $4B in Canopy Growth Corporation (NYSE: CGC) as it sees significant potential for marijuana-infused beverages and, due to its experience in the beverages industry and its existing sales networks, anticipates becoming one of the biggest players in this burgeoning market. It has a beta of 0.71, a dividend yield of 1.6% and its stock went up 0.4% in September.
5. Molson Coors Brewing Company (NYSE: TAP)
Molson Coors has moved into the marijuana industry through a joint venture with The Hydropothecary Corporation (NYSE: HEXO) which will focus on producing marijuana-containing, but alcohol-free, beverages for the Canadian market initially, but will likely expand globally if legalization in other countries allows for entry into these markets. It has a beta of 0.79, a dividend yield of 4.0% and its stock went up 11.9% in September.
6. The Scotts Miracle-Gro Company (NYSE: SMG)
Scotts supplies lighting, soil, nutrient, and hydroponic solutions to the North American cannabis-growing industry. It has a beta of 0.79, a dividend yield of 2.2% and its stock went down 4.2% in September.
7. Novartis AG (NYSE: NVS)
Novartis has entered into a global agreement with major grower Tilray Inc. (NASDAQ: TLRY) through its Sandoz division which allows Tilray to use the Sandoz supply chain, sales force and global distribution network to distribute its medical cannabis products to legal jurisdictions around the world. It has a beta of 0.53, a dividend yield of 3.3% and its stock went down 3.6% in September.
The other 5 marijuana-related companies that pay dividends are as follows:
- Compass Diversified Holdings (NYSE: CODI) has a beta of 1.13, a dividend yield of 7.4% and had an increase of 5.2% in the price of its stock in September.
- Imperial (Tobacco) Brands PLC (OTCQX: IMBBY) has a beta of 0.58, a dividend yield of 6.8% and had a price decline of 13% in its stock price in September.
- Amsterdam Commodities NV (OTCPK: ACNFF) has a beta of 0.84, a dividend yield of 5.3% and saw its stock price remain unchanged in September.
- Anheuser-Busch InBev SA (NYSE: BUD) has a beta of 1.2, a dividend yield of 2.4% and saw its stock price increase 0.68% in September.
- Innovative Industrial Properties Inc. (NYSE: IIPR) has a beta of 2.1, a dividend yield of 3.4% and had an increase of 3.6% in its stock price in September.
In summary, the above 12 stocks have an average beta of 0.915, an average dividend yield in excess of 1.1% and appreciated in price by 1.16% in September. That compares extremely well with the market in general which was down 18.6% in September.
Investors should take a close look at all relevant data points before making any decisions, especially in a higher-risk environment such as the emerging marijuana industry. Choosing lower-risk stocks which allow for some indirect exposure to the industry, such as the ones above, could be an opportune move for investors, especially for those that desire dividend income from their stock holdings.