Profit From Farmland and Collect a 3.7% Dividend Yield

Many industries rise and fall, depending on economic trends and shifts in consumer behavior. Certain industries are susceptible to booms-and-busts. But perhaps no industry is as stable as the agriculture industry. Agriculture has been in practice for thousands of years, and as the need for food remains a constant for human survival, it isn't likely to change much in the decades ahead. Plus, the agriculture industry benefits from favorable economics. The global population continues to rise, while the amount of land available for farming continues to decline. This presents investors with an ample opportunity to profit. One way to do this would be to invest in Gladstone Land Corporation , an agriculture stock with a nearly 4% dividend yield, along with monthly dividend payouts. Gladstone has an attractive dividend yield, monthly payouts, and is set to capitalize on the long-term growth potential of the agriculture industry. Business Overview Gladstone Land Corporation is a real estate investment trust, or REIT, that owns farmland properties. The trust owns 127 farms, comprising 94,000 acres valued at $1 billion. It operates on the triple-net basis, an attractive structure for a REIT as it provides steady rental income while placing the three main expenses-maintenance, insurance, and taxes-onto the tenant. The trust offers long-term sale leaseback transactions, traditional leases of farmland, and outright purchases of farm properties. While many REITs are struggling with rent collection amid the coronavirus pandemic, Gladstone has performed very well in 2020. It has hardly encountered any issues with rent collection or occupancy, benefiting from the continued need for farmland. According to the company, occupancy has never fallen below 99.5% since its IPO in 2013. The resilience of Gladstone's investment portfolio has continued in 2020. For example, in the 2020 third quarter, Gladstone collected 100% of rent. It also collected 100% for the first nine months of the year. Total lease revenues increased 10.7% last quarter, a very strong top-line growth rate considering the difficult economic climate. Adjusted funds from operations (FFO) per share increased 40% from the previous quarter. Favorable Growth Outlook Gladstone has a positive long-term growth outlook going forward, as it will benefit from favorable industry economics. Put simply, people need to eat, which means there will always be a certain level of demand for farmland. This is why the company's current acreage is 100% leased, and cropland steadily increases in value. At the same time, the amount of available farmland continues to decrease, driven by urbanization and deforestation with the rising global population. Separately, Gladstone notes the impact of climate change on reducing the amount of available farmland. Finally, Gladstone has taken a unique investment focus. Rather than investing in commodity crops, which have higher risks, Gladstone's property investments focus on fresh produce. There are many reasons for this. Gladstone states that fresh produce farmland has higher rental rates than commodity crop farmland, while commodities require additional costs to dry and store whereas fresh produce is usually consumed within days. As a result, Gladstone believes fresh produce farmland is more productive than commodity crop farmland in terms of revenue per acre, while simultaneously being more profitable for farmers, and earning the highest rents for landlords. Gladstone will capitalize on this growth potential, through acquisitions of new properties and rental increases on existing properties. Acquisitions are a key component of growth for this REIT. Since its IPO in 2013, Gladstone has purchased more than $910 million in new farm assets. The result of this has been a more than 13x increase in the company's lease revenue since its IPO. This has continued in 2020. In the most recent quarter, Gladstone acquired eight new farms, consisting of more than 3,400 total acres for approximately $39.2 million. On a weighted-average basis, the eight farms were acquired at an initial cap rate of 5.4%. Cash rents will rise in the coming years, as these leases contain provisions for annual rent escalations or participation rents. Dependable Monthly Dividends Gladstone is a monthly dividend stock. Instead of distributing payouts on the more typical quarterly or semi-annual schedules, the company issues 12 dividend payments per year. More frequent dividend payments makes Gladstone slightly more attractive as a dividend investment, particularly for investors who desire payments each month. The company currently pays a monthly dividend rate of $0.0449 per share, equaling $0.5388 annualized, for a current yield of 3.7%. Gladstone's dividend yield compares favorably to the broader S&P 500 Index, which has an average yield of just 1.6% right now. Gladstone stock yields more than twice the average yield of the broader market index, making it an attractive income stock by comparison. Plus, Gladstone has delivered steady dividend growth over the course of its history. The company has paid 94 consecutive monthly cash distributions on its common stock since its initial public offering in 2013. Furthermore, it has increased its dividend 20 times in the past 23 quarters. Therefore, Gladstone stock is a unique mix of yield and growth. Final Thoughts At a time when many REITs are struggling, particularly those in the retail and restaurant industries, Gladstone Land continues to deliver strong results. Occupancy and rent collection remain very high, leading to stable FFO. As a result, Gladstone has maintained its attractive dividend and monthly payouts. With a nearly 4% yield and stable growth, Gladstone is an attractive REIT for investors looking to diversify and invest in agriculture.

Profit From Farmland and Collect a 3.7% Dividend Yield

This is an attractive REIT for investors looking to diversify and invest in agriculture while receiving monthly dividends.

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