Chicago Atlantic Real Estate Finance (NASDAQ:REFI) has emerged as a stable investment in the volatile U.S. cannabis sector, delivering returns even as the market faces turbulence. This strategic resilience is underscored in the latest equity research by Pablo Zuanic of Zuanic and Associates.
Financial Highlights
In the second quarter of 2024, REFI's loan book grew to $382 million, achieving an 8% compound annual growth rate over 24 months. Despite broader market downturns, REFI's stock exhibited minimal decline, contrasting sharply with the 13.4% drop in the MSOS ETF, demonstrating its robust market position.
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Dividends And Returns
REFI has maintained a consistent dividend payout, with the annualized yield standing at 13.6%, significantly outpacing 10-year Treasury rates. "REFI's dividend strategy reflects its robust approach to value return amidst market volatilities," Zuanic said.
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Comparative Analysis
Compared to peers, REFI commands a 7% premium to book value, justified by its superior growth and stable dividends. The portfolio's yield to maturity of 18.7% further solidifies its attractive position relative to other mortgage REITs, especially those outside the cannabis sector.
Investment Outlook
Zuanic endorses an 'Overweight' stance on REFI, citing potential growth driven by anticipated regulatory changes and expansion within the U.S. cannabis industry. He projects a conservative 10% annual growth in the loan book and anticipates dividend increases, reinforcing REFI's appeal as a high-yield, low-volatility investment.
Zuanic concluded that REFI emerges as a prudent choice for investors seeking stability and consistent returns in the cannabis finance sector, backed by strategic management and solid financial fundamentals.
