Agriculture stock options
Agriculture started around 14, years ago. And, the growth of the global population is tied to increasing agricultural efficiency. The agricultural revolution allowed greater population growth and led to the industrial revolution. As the global population grows, so does the need for improved agricultural production.
This creates a long-term demand driver for agricultural stocks. You can download the complete list of all 36 agricultural stocks along with important financial metrics such as price-to-earnings ratios, dividend yields, and dividend payout ratios by clicking on the link below:. Click here to download your free list of agricultural stocks now, along with important metrics like dividend yields and price-to-earnings ratios.
This article analyzes 7 of the best agricultural stocks in detail. You can quickly navigate the article using the table of contents below. We have ranked our 7 favorite agriculture stock picks below. These rankings are qualitative in nature. We believe the following 7 stocks are the best picks in the agriculture industry right now, due to a combination of business quality and future growth prospects.
Even better, all 7 stocks pay dividends to shareholders, making them attractive for income investors. Interested investors should view this as a starting off point to more research. Calavo Growers operates in the farm products industry. It was founded in Today, it markets and distributes avocados and other foods. The Fresh Products segment sizes, packs, and ripens avocados for delivery to its customers. The Calavo Foods segment procures and processes avocados into guacamole, and distributes it to customers.
Lastly, its Renaissance Food Group produces and distributes a variety of healthy fresh packaged food products, such as tomatoes and papayas, through retail channels. Calavo Growers earns a place on this list because of its growth story. As such, they have great appeal to health-conscious consumers. This is an emerging trend in the United States; consumers are becoming much more aware of what they are eating. Healthier foods like avocados are seeing strong demand as a result. Adjusted diluted earnings-per-share tripled over the same time.
Household penetration of avocados is still below other common fruits, which means Calavo has a long runway of future growth up ahead. Calavo is an industry leader, with durable competitive advantages. It has more than 15 production and distribution facilities throughout the United States, giving the company the opportunity for continued growth in the years ahead.
Calavo pays an annual dividend, typically in October. Calavo has increased its dividend for 9 consecutive years. If Calavo continues to generate high levels of growth, it is conceivable shareholders could be in line for continued dividend growth. Shares currently yield 1.
The trust owns 1 37 farms , comprising about , acres of farmable land. The trust offers long-term sale leaseback transactions, traditional leases of farmland, and outright purchases of farm properties. Gladstone reported fourth quar ter and full year earnings on February 24 th , T he increase was driven by higher lease revenues recorded during the quarter as a result of recent acquisitions — which Gladstone has done quite a few of in recent quarters — which w as partially offset by financing costs. Core operating expenses were essentially flat year — over — year.
Gladstone has a solid long-term growth runway up ahead, due to the favorable economics of its key markets. Specifically, there is a decreasing supply of U. As the global population continues to grow, the amount of available farmland in the U. Source: Investor Presentation. Acquisitions will help Gladstone capitalize on its growth opportunities.
The low volatility of farmland has been proven during the coronavirus pandemic. Gladstone is a monthly dividend stock , meaning it pays 12 dividends per year to shareholders, instead of the more typical four payments. We believe the combination of FFO growth and dividends can produce total returns in the high-single digits, making Gladstone an attractive stock for income investors. Bunge Limited was founded all the way back in Today, Bunge is a holding company.
Its core business is to supply and transport agricultural commodities.
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The Agribusiness segment involves storage and transportation of agricultural commodities. The Edible Oil Products segment includes production and sale of vegetable oils, shortenings, margarines, and mayonnaise. The Milling Products segment produces wheat flours, bakery mixes, corn-based products, and rice.
The Sugar and Bioenergy segment manufactures sugar and ethanol, while the Fertilizer segment produces and distributes fertilizer. Bunge has hardly been affected by the coronavirus pandemic, as the company has seen steadily improving earnings over the past several quarters. Such strong growth was due to favorable economics such as growing demand, combined with limited supply. Bunge has improved its ROIC trends in recent periods. Raising its ROIC has meaningfully improved its cash flow, which fuels its impressive cash returns to shareholders.
On a positive note, rising global populations are a long-term growth catalyst for Bunge, which will result in higher demand for agricultural commodities of all sorts. The emerging markets are an increasingly important area for Bunge. Further, as the world's population increases, farming will play an increasingly important role in sustaining global societies.
How to Invest in Farming Without Owning a Farm
That said, literally buying a farm isn't a feasible strategy for the average investor. Buying a farm can require a large capital commitment and the time and costs of operating or leasing a farm are often substantial. Fortunately, investors have many other means to gain exposure to the sector beyond sinking money into a farm.
The closest that an investor can get to owning a farm without actually doing so is by investing in a farming-focused real estate investment trust REIT. Some examples include Farmland Partners Inc. These REITs typically purchase farmland and then lease it to farmers. Farmland REITs offer many benefits.
For one thing, they provide much more diversification than buying a single farm, as they allow an investor to have interests in multiple farms across a wide geographic area. Farmland REITs also offer greater liquidity than does owning physical farmland, as shares in most of these REITs can be quickly sold on stock exchanges. Investors also have access to an assortment of publicly-traded companies that operate in the farming sector. These companies range from those that directly grow and produce crops to those working in a variety of industries that support farmers.
One potential investment opportunity is in firms that plant, grow, and harvest crops.
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Many of these firms also engage in such supporting activities as distribution, processing, and packaging. Unfortunately, there are a limited number of publicly-traded crop production firms, which include Fresh Del Monte Produce Inc. FDP , Adecoagro S. Investors can also buy shares in a variety of industries that support farming.
Three of the largest industries are companies that sell fertilizer and seeds, farm equipment manufacturers, and crop distributors and processors. Exchange traded funds ETFs are a good tool for investors to gain diversified exposure to the agriculture sector.
Investing in Agriculture Stocks
Like investing in any type of ETF, investors should carefully consider each ETF's management fees and the performance of the index that the fund tracks. There are also mutual funds that invest in the farming and agriculture industries. If this sounds appealing, you should first determine whether the fund invests in agriculture-related firms or invests in commodities. Also, keep in mind that many of these funds have exposure to other sectors along with agriculture.
So if you're more interested in making a pure farming or agriculture investment, you're likely better off going with other types of asset classes. When investing in mutual funds, investors need to consider fees and past performance, and compare these to those of ETFs, for example. More speculative investors may be intrigued by the idea of directly investing in commodities , hoping to take advantage of price changes in the marketplace.
While you can gain exposure to commodities just by purchasing futures contracts , there are also a number of ETFs and exchange traded notes ETNs that provide more diverse access to commodities. Investors looking to invest in the farming sector have plenty of alternatives to actually purchasing a farm. Investors who hope to most closely replicate the returns of owning farmland can purchase a farmland REIT. For those looking for wider exposure to the agriculture sector, making equity investments in crop producers, supporting firms or ETFs could be their best option.
And those looking to profit from price changes in agricultural commodities have a range of futures contracts, ETFs, and ETNs at their disposal. With all of these options, investors should be able to find an investment vehicle and strategy that fits their needs. Real Estate Investing.