Agricultural Real Estate: These Are the Best Farmland REITs

Agricultural Real Estate: These Are the Best Farmland REITs

Farmland REITs like LAND and FPI make it easy to invest in agriculture without owning a farm.

Agricultural Real Estate: These Are the Best Farmland REITs
Liz Aldrich

Updated Sep 29, 2022

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Farmland

Farmland

Real Estate

Real Estate

Balanced Investing

Balanced Investing

If you're looking for the best farmland REITs, then you probably already know that adding farmland investments to your portfolio comes with a long list of wealth-building and diversification benefits.

As a fairly secure uncorrelated asset, farmland can help you protect your wealth during market downturns.

Farmland is one of the best ways to hedge against inflation, as land value tends to increase when prices do. It's also an uncorrelated asset, which means it doesn't follow stock market trends, making it an excellent option for making your portfolio more recession-resistant.

However, investing directly in farmland can cost a lot of money and require a good amount of agricultural knowledge. It's also an active investment because you'll have to invest the time and energy to cultivate the land yourself or manage your tenants if you rent it out. If these are barriers to entry for you, then the best farmland REITs can be a great way to gain easy, passive exposure to farmland at a lower price.

What is a farmland REIT?

A farmland REIT is a real estate investment trust (REIT) invested in a diversified farmland portfolio. These farmland REITs usually hold various types of farmland across a range of states, and they rent that land out to farmers. You can buy shares in a farmland REIT similar to buying shares in a company on the stock market.

As the value of the REIT's land holdings goes up, so does the price of your shares, meaning capital appreciation on your investment. In addition to these returns, you can also earn dividends on farmland REITs thanks to the rental income they receive. Farmland REITs offer one of the best ways to invest in farmland without actually purchasing land, along with agriculture ETFs and crowdfunding platforms like FarmTogether.

Comparing the best farmland REITs

Gladstone Land Corporation (LAND)

  • Fruit and produce farms
  • Net Profits up 196.82% YoY (June 2022)
  • Dividend yield of 2.79% (Sept. 2022)

Gladstone Land Corporation (LAND) is a farmland REIT that was formed in 1997 and now owns holdings in 150+ farms across 14 different states. Their primary holdings are fruit and produce farms that cost between $2 million and $40 million. The total market capitalization of Gladstone Land Corp. is
,making it the largest farmland REIT in the world. LAND is also the fastest-growing REIT, up
over the last year and about 20% over the past five years.

LAND is offering a dividend yield of 2.79%, which is fairly standard. Over the past few years, this farmland REIT has paid between $0.04 and $0.05 per share in monthly dividend payments. The most recent dividend payment for September 2022 was $0.0456 per share, which translates to about $0.54 per share if you held this REIT for a year.

Farmland Partners Inc. (FPI)

  • Major commercial crops
  • Net Profits Up 181.14% YoY (June 2022)
  • Dividend yield of 1.52% (Sept. 2022)

Farmland Partners Inc. (FPI) is the second-largest farmland REIT by market cap, with holdings that comprise approximately 157,000 acres spread across 16 different states. Farmland Partners' 100 farmland tenants grow 26 major commercial crops aimed at filling the demand for food, fuel, fiber, and feed. This REIT is up
this year, but only 4.82% over the last five years. That said, it's been trending upward for the past year.

Farmland Partners merged with the only other farmland REIT in the U.S.—formerly known as American Farmland Company (AFCO)—in 2017. This made FPI the largest farmland REIT at the time, but LAND's rapid growth over the past year and a half managed to overtake it. The dividend yield of FPI is currently 1.52% but has fluctuated between 1.61% and 3.80% over the past few years.

How to invest directly in farmland without buying a farm

The best farmland REITs offer an easy and convenient way to invest in farmland without actually owning farmland, but they can sometimes mirror the stock market in a way that reduces their diversification benefits. Direct farmland investing is often a better option for protecting your portfolio against inflation and market crashes, and platforms like FarmTogether let you do that without actually having to buy land.

Instead, you can invest in a portion of a farm that's already operating and generating revenue with as little as $10,000. You can pick from a range of different locations, properties, and crop types, and there's even an option to own an entire farm outright with a few clicks of a button. You'll earn returns in the form of both land value appreciation and farm income. You must be an accredited investor to be eligible for most farmland crowdfunding platforms.

farmtogether
FarmTogether

4.7

Farmland

Frequently asked questions about investing in farmland

Can a REIT invest in agricultural land?

Farmland REITs invest in agricultural land as their real estate holdings. This allows investors to add farmland exposure to their portfolio by purchasing shares in these agricultural REITs.

How many farmland REITs are there?

There are currently two farmland REITs in the U.S.: Gladstone Land Corporation (LAND) and Farmland Partners Inc. (FPI). There were three farmland REITs, the third being American Farmland Company (AFCO), but AFCO and FPI merged in 2017.

Is there an ETF for farmland?

There are a number of agricultural ETFs that allow investors to purchase shares of a diversified basket of agricultural holdings. Rather than investing directly in farmland, these farmland ETFs typically invest in commodities like grains, corn, soybeans, livestock, cattle, sugar, and more through future contracts in an attempt to mimic agricultural indexes.

There are a number of agricultural ETFs that allow investors to purchase shares of a diversified basket of agricultural holdings. Rather than investing directly in farmland, these farmland ETFs typically invest in commodities like grains, corn, soybeans, livestock, cattle, sugar, and more through future contracts in an attempt to mimic agricultural indexes.

We Bought a Farm!

We Bought a Farm!

REITs or direct investments?

Is farmland a good investment?

Farmland can be a great way to diversify your portfolio beyond stocks and bonds. As a fairly secure uncorrelated asset, farmland can help you protect your wealth during market downturns. Our farmland study found that the asset class outperformed the stock market while experiencing far less volatility. Farmland is considered a good investment because it's a necessity that's becoming more scarce as supply decreases.

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