From the Wall Street Journal by Liz Moyer
Investing in farmland and forest tracts is sometimes described as “gold with a coupon”—a hedge against inflation, because land prices tend to rise along with overall inflation, that also pays a steady income.
Small investors have access to these markets through publicly traded real-estate investment trusts. Share prices of REITs that buy farm and timber land have dropped in recent weeks, but most of them yield dividends well above the current yields of about 0.95% on the three-year U.S. Treasury note and 2.11% on the seven-year Treasury.
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For farms, there are two relatively new REITs. Gladstone Land LAND +1.62% raised $57 million in its January 2013 initial public offering and now owns 6,833 acres on 28 farms in California, Florida, Michigan, Oregon and Arizona, according to securities filings. Its dividend yield was about 5.82% in recent trading. Farmland Partners, FPI -0.17% meanwhile, had a $53 million initial public offering in April and owns 41 farms with 23,630 acres in Illinois, Nebraska and Colorado, along with three grain-storage facilities. Its dividend yield is about 0.90%.
Publicly traded timberland REITs have been around longer. The two biggest are Weyerhaeuser WY +0.15% and Plum Creek Timber. PCL +0.19%
Weyerhaeuser converted to a REIT in 2010 and recently completed a spinoff of its home-building division. It is one of the biggest forest-products companies, with seven million acres of timber in the U.S. Weyerhaeuser recently raised its dividend to 29 cents a share from 22 cents; its yield is about 2.80%.
Plum Creek Timber owns 6.7 million acres in the Northwest, Northeast and South—and six wood-product conversion facilities in the Northwest. Its dividend yield is about 4.35%.
Rounding out the biggest timberland REITs are Potlatch Corp. PCH -0.40% and Rayonier, RYN -0.12% with dividend yields of about 3.20% and 5.78%, respectively.
Liz Moyer is a reporter for The Wall Street Journal in New York. Email her at [email protected].