|
Getting Down to Earth with Timber and Farmland REITs
In an effort to uncover investments that aren't headliners on CNBC or Fox Business, idleguy.com looked at a couple of investments that may be suitable for people who aren't really interested in tech, or energy, or any of the big name companies like Amazon, Apple, Verizon, Visa, Walmart, or McDonald's.
For informational purposes only, here are a couple of companies that may appeal to people who are naturalists, rural-oriented, or believe in the value of hard assets. These two companies are structured as REITs (Real estate Investment Trusts). As such, profits are derived from land and how that land is developed or exploited to produce profits.
Most REITs are focused on rental properties, be they buyers and managers of apartment complexes, shopping centers and malls, or commercial buildings and industrial properties. REITs are typified by stable share prices and solid quarterly dividends as opposed to share price increases which are the standard of most public companies.
These REITs offer stability and long-term income with quarterly dividend disbursements and, often, special dividends distributed to common shareholders.
These two companies are vastly different from the rest, as you will see.
Farmland Partners Inc. (FPI)
https://www.farmlandpartners.com
Farmland is a rare sector that benefits from growing demand in the face of shrinking supply.
As of December 31, 2023, the Company owns and/or manages approximately 171,100 acres in 16 states, including Arkansas, California, Colorado, Florida, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, South Carolina and Texas. In addition, the Company owns land and buildings for four agriculture equipment dealerships in Ohio leased to Ag Pro under the John Deere brand.
The Company has approximately 26 crop types and over 100 tenants. The Company elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes, commencing with the taxable year ended December 31, 2014.
Over the past 25 years, U.S. farmland has delivered steady appreciation and returns, while exhibiting lower volatility and correlation than broader real estate and equity markets.
Farmland Partners owns or manages approximately 136,000 acres of farmland across 15 states, which includes over 200 farms owned outright and leased.
With 60% of their portfolio allocated to traditional row crops and 40% to specialty crops, Farmland Partners mitigates risk with a diversified portfolio within its own business structure. As of October, 2024, the vacancy rate of their farmland was ZERO (0%).
FPI works with farm families that are leading the way in sustainability by embracing the latest agronomic techniques, technologies, and conservation practices to drive efficiency and preserve the land they farm.
The share price has leveled off between 10 and 12 dollars per share, which makes it a highly accessible investment for smaller amounts and dollar cost averaging.
The company, headquartered in Denver, Colorado, owns properties mainly in the central states (corn belt) and Southern US, with additional acreage in North and South Carolina, Florida, and California.
Consistently delivering a quarterly dividend of 0.06 (0.24 annually) for a dividend yield of around two percent.
A report prepared by Green Street Advisory and Consulting offers a U.S. Farmland Sector Primer for more information.
Rayonier (RYN) is a company whose sole focus is on timberland.
Rayonier is a leading timberland real estate investment trust with assets located in some of the most productive softwood timber growing regions in the United States and New Zealand. As of December 31, 2023, Rayonier owned or leased under long-term agreements approximately 2.7 million acres of timberlands located in the U.S. South (1.85 million acres), U.S. Pacific Northwest (418,000 acres) and New Zealand (421,000 acres).
Rayonier was founded in 1926 in Shelton, Washington and today is headquartered in Wildlight, Florida. Over the years, Rayonier has expanded to become the second-largest timber REIT with approximately 2.7 million acres located in some of the strongest timber markets and most productive softwood timber growing regions throughout the United States and New Zealand.
The company is a leading timberland real estate investment trust (REIT) committed to creating value through excellence in our core businesses: Forest Resources and Real Estate. We are a responsible steward of the land, managing every acre towards its highest and best use to achieve optimal and sustainable value.
Rayonier has been consistently delivering dividends to shareholders since 1997. The current share price is around $27.50 and the quarterly dividend is 0.285 ($1.14 annually) for a dividend yield of roughly 4.36%.
The stock price is currently near a four-year low, at $25.94 and has traded as high as $44 (April, 2022).
Disclaimer: Fearless Rick, IdleGuy.com and Downtown Magazine Inc. are not financial advisors and this article and others are for informational purposes only and are not recommendations to buy or sell any securities or financial products. Readers should make their own investment decisions or get advice from a registered investment specialist.
|
Your ad could be in the next issue of idleguy.com for as little as $6 per month. Contact Fearless Rick using the form on page 12 for more information.
Understanding Sectors and Allocations
There are 11 different stock market sectors, according to the most commonly used classification system, known as the Global Industry Classification Standard (GICS).
At a glance, the 11 GICS stock market sectors are:
How much of a portolio one should expose to various sectors often comes down to a matter of personal preference. Some people are comfortable with investments in businesses and industries they understand, others have a dislike for certain areas of industry and may wish to avoid those.
In the long run, how an individual portolio is exposed to various sectors - often referred ot as diversification - can go a long way toward mitigating risk by not being overly dependent on individual secotrs or just a few. A properly divesified portfolio of size would have investments spread across all sectors, but at different levels.
Maximizing returns is always a primary objective, but individual investors must be keen to spot special situations which may work in favor or against certain sectors and make positional moves accordingly.
Disclaimer: Fearless Rick, IdleGuy.com and Downtown Magazine Inc. are not financial advisors and this article and others are for informational purposes only and are not recommendations to buy or sell any securities or financial products. Readers should make their own investment decisions or get advice from a registered investment specialist.
|