Up to date on June tenth, 2021 by Bob Ciura
Gladstone Land Company (LAND) is a Actual Property Funding Belief. REITs are in style investments as a result of they usually pay excessive dividend yields. Gladstone Land is one among 166 publicly-traded REITs within the Certain Dividend database. You may see all 166 REITs right here.
Gladstone Land has a beautiful dividend yield of two.1%, which isn’t the very best yield round however it’s nonetheless higher than the ~1.4% common yield of the S&P 500 Index. As well as, the belief pays its dividends every month, relatively than every quarter.
You may obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter like dividend yield and payout ratio) by clicking on the hyperlink beneath:
Gladstone Land is a novel REIT. Many REITs personal bodily buildings throughout varied industries like retail or healthcare. Gladstone Land, nonetheless, owns farmland, in addition to vineyards.
This text will talk about the belief’s prospects and why it could possibly be a invaluable inventory for diversification and excessive dividend earnings.
Gladstone Land Company is an actual property funding belief, or REIT, that focuses on the proudly owning and working of farmland within the U.S. The belief owns 141 farms, comprising about 104,000 acres of farmable land. Gladstone’s enterprise is made up of three totally different choices out there to farmers, all of that are completed on a triple–internet foundation.
The belief provides lengthy–time period sale leaseback transactions, conventional leases of farmland, and outright purchases of farm properties. Gladstone’s portfolio has an appraised worth of $1.2billion.
Triple-net leases are interesting because the belief receives a gentle stream of rental earnings, whereas the tenants are liable for actual property taxes, insurance coverage, and upkeep bills. Among the belief’s leases additionally embody a revenue-sharing element, based mostly on the crops harvested on the farms.
The REIT has loved sturdy portfolio metrics reminiscent of occupancy and rental earnings progress.
Supply: Investor Presentation
Gladstone Land’s funding focus is totally on recent produce, which it believes is the group with superior long-term fundamentals.
Commodities are likely to yield much less for farmers, so lessors of the farmland additionally are likely to earn much less. Specializing in one of the best plots of land which are used for essentially the most worthwhile crops is a bonus for Gladstone Land.
U.S. farmland has confirmed to be a really sturdy funding over a few years, characterised by stronger returns and decrease volatility than different actual property investments, and the S&P 500 Index.
Gladstone reported first quarter earnings on Might 12th, 2021, with outcomes coming in higher than expectations on each the prime and backside traces. Gladstone reported core funds–from–operations per share of $0.18, up 12.5% from the earlier quarter.
Web asset worth ended the quarter at $12.69 per share, up 3.8% from the December quarter. Development was primarily pushed by a lower within the honest worth of mounted lengthy–time period borrowings, which was the results of greater market rates of interest. As well as, the belief subjectd widespread shares at above estimate NAV, which generated an extra achieve.
Gladstone Land has optimistic long-term progress prospects, as a result of it stands to capitalize on two main long-term tendencies. The primary catalyst is progress of the worldwide inhabitants. The world inhabitants is round 7.5 billion, and powerful progress charges are anticipated to proceed.
This can be a long-term tailwind for people who personal farmland as a constantly-increasing inhabitants will want ever-increasing quantities of meals.
On the identical time, there may be solely a lot land for farming. In reality, the availability of obtainable farmland is definitely lowering within the U.S., as giant quantities of farmland are transformed to suburban use annually, for issues like housing, faculties, and places of work.
The mix of falling provide and growing demand has triggered farmland costs to rise steadily for a few years. As the availability and demand tendencies aren’t anticipated to reverse any time quickly, Gladstone Land continues to have a robust future progress outlook.
Supply: Investor Presentation
Future progress shall be achieved by progress at present properties, and by investing in new properties. For instance, within the 2021 first quarter Gladstone Land acquired three new farms, consisting of 233 acres, for $5.6 million.
There may be loads of room for future M&A exercise.
The U.S. farmland business is very fragmented, with important household possession. This implies the surroundings for continued acquisitions stays fertile for Gladstone Land. Gladstone Land continues to make significant acquisitions, as seen above, and we consider it is a regular supply of progress for the belief transferring ahead.
This technique has led to a better share depend over time, with the above-mentioned important dilution of 2019 for example. However over time, acquisitions are key to the belief’s progress. Gladstone Land continues to pursue engaging acquisition alternatives, and there may be little motive to suppose its progress will stop.
These fundamentals have led to long-term progress as measured by adjusted FFO, though progress has leveled off lately. Income has grown by ~9X for the reason that IPO – in a interval of simply over six years – and adjusted FFO has practically tripled in that point.
We count on adjusted FFO/share progress of 5% per yr over the subsequent 5 years.
Not surprisingly, Gladstone Land’s dividends will make up a good portion of complete future returns. This, in fact, is typical for a REIT. REITs are required by regulation to distribute a minimum of 90% of earnings within the type of dividends to shareholders, which is why so many trusts provide a really excessive dividend.
Gladstone Land at the moment pays a month-to-month dividend of $0.045 per share. The annualized payout of $0.54 per share represents a present dividend yield of two.1%.
Gladstone Land has dividend observe document. The corporate has paid 100 consecutive month-to-month dividends since its preliminary public providing in January 2013, and has elevated its dividend 22 occasions over the previous 25 quarters.
Primarily based on anticipated adjusted FFO-per-share of $0.65, Gladstone Land has a projected dividend payout ratio of 83%. This is a vital sign that the distribution is roofed by underlying adjusted FFO.
The rising world inhabitants and falling provide of obtainable farmland within the U.S. arrange a really favorable future for Gladstone Land. Provide and demand components help continued farmland funding. This implies Gladstone Land ought to be capable to proceed rising its FFO and dividend over the long run.
The belief pays a beautiful dividend yield of above 2%, with the potential for dividend will increase at a price above inflation over time. General, Gladstone Land is a beautiful month-to-month dividend inventory.
Thanks for studying this text. Please ship any suggestions, corrections, or inquiries to email@example.com.