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
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Published Nov 30, 2021Updated Dec 21, 2021

Farmland

Farmland

Real Estate

Real Estate

Balanced Investing

Balanced Investing

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

Farmland is one of the best ways to hedge against inflation, as the value of land tends to increase when prices do. It's also an uncorrelated asset, which means it doesn't follow the same trends as the stock market, making it a great 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 put in the time and energy to cultivate the land yourself or manage your tenants if you choose to rent it out. If these are barriers to entry for you, the best farmland REITs can be a great way to invest in farmland easily, passively, and at a lower price tag.

What is a farmland REIT?

A farmland REIT is a real estate investment trust (REIT) that's invested in a diversified portfolio of farmland. These farmland REITs usually hold a variety of different types of farmland across a range of different 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. 

If the value of the REIT's land holdings goes up, so does the price of your shares, offering 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)Farmland Partners Inc. (FPI)

Share price

(as of 11/19/2021)

$28.16$12.40

Dividend yield

(as of 11/19/2021)

1.93%1.61%

Market cap

(as of 11/19/2021)

$963.35M$558.78M

Source: google.com/finance, data accurate as of 11/19/2021

Gladstone Land Corporation (LAND)

  • Fruit and produce farms
  • Up 87.36% over the last year
  • Dividend yield of 1.93%

 

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 LAND is nearing $1 billion, making it the largest farmland REIT in the world. It's also the fastest-growing REIT, up about 87% over the last year and about 150% over the past five years.

LAND is currently offering a dividend yield of 1.93%, which is fairly standard. Over the past few years, this farmland REIT has paid between $0.044 and $0.045 per share in monthly dividend payments. The most rrecent dividend payment for November 2021 was $0.0452 per share, so if you purchased $10,000 worth of shares in this REIT, you'd earn a monthly dividend payment of $16. 

Farmland Partners Inc. (FPI)

  • Major commercial crops
  • Up 51.04% over the last year
  • Dividend yield of 1.61%

 

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.  Their 100 farmland tenants grow 26 major commercial crops aimed at filling the demand for food, fuel, fiber, and feed. This REIT is up about 51% over the last year but only 4.82% over the last five years. That said, it's been trending upward for the past year.

FPI merged with the only other farmland REIT in the US—formerly known as American Farmland Company (AFCO)—in 2017. This made it 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 offered by FPI is currently at 1.61%, and it's fluctuated between 1.61% and 3.80% over the past few years.

How to invest directly in farmland without buying a farm

While the best farmland REITs offer an easy and convenient way to invest in farmland, they can sometimes mirror the stock market in a way that reduces their diversification benefits. Investing directly in farmland 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 land income. You do have to be an accredited investor to invest with most farmland crowdfunding platforms.

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Frequently asked questions

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 US: 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.

Is farmland a good investment?

Farmland can be a great way to diversify your portfolio beyond stocks and bonds. As an uncorrelated asset that's fairly secure, farmland can help you protect your wealth during market downturns. Over the past 60 years, farmland has performed almost as well as the S&P 500 while experiencing far less volatility. Farmland is considered a good investment because it's a necessity that's decreasing in supply.

Read more

How to Invest in Farmland (Without Buying a Farm)

How to Invest in Farmland (Without Buying a Farm)

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