Up to date on June tenth, 2021 by Bob Ciura
Gladstone Land Company (LAND) is a Actual Property Funding Belief. REITs are widespread investments as a result of they usually pay excessive dividend yields. Gladstone Land is considered one of 166 publicly-traded REITs within the Certain Dividend database. You possibly can see all 166 REITs right here.
Gladstone Land has a pretty dividend yield of two.1%, which isn’t the 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, somewhat than every quarter.
You possibly can 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 under:
Gladstone Land is a singular 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 focus on the belief’s prospects and why it could possibly be a helpful inventory for diversification and excessive dividend earnings.
Gladstone Land Company is an actual property funding belief, or REIT, that makes a speciality of 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 accessible to farmers, all of that are finished on a triple–web foundation.
The belief affords 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 gradual stream of rental earnings, whereas the tenants are accountable for actual property taxes, insurance coverage, and upkeep bills. A few of the belief’s leases additionally embrace a revenue-sharing element, based mostly on the crops harvested on the farms.
The REIT has loved sturdy portfolio metrics corresponding to occupancy and rental earnings development.
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 the most effective plots of land which might be 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.
Internet 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 truthful worth of fastened lengthy–time period borrowings, which was the results of larger market rates of interest. As well as, the belief concernd frequent shares at above estimate NAV, which generated an extra achieve.
Gladstone Land has constructive long-term development prospects, as a result of it stands to capitalize on two main long-term developments. The primary catalyst is development of the worldwide inhabitants. The world inhabitants is round 7.5 billion, and robust development charges are anticipated to proceed.
This can be a long-term tailwind for those who personal farmland as a constantly-increasing inhabitants will want ever-increasing quantities of meals.
On the similar time, there’s solely a lot land for farming. In actual fact, the provision of accessible farmland is definitely reducing within the U.S., as massive quantities of farmland are transformed to suburban use every year, for issues like housing, colleges, and workplaces.
The mixture of falling provide and rising demand has prompted farmland costs to rise steadily for a few years. As the provision and demand developments aren’t anticipated to reverse any time quickly, Gladstone Land continues to have a powerful future development outlook.
Supply: Investor Presentation
Future development can be achieved by development at current 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’s loads of room for future M&A exercise.
The U.S. farmland trade is very fragmented, with vital 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 imagine this can be a regular supply of development for the belief transferring ahead.
This technique has led to the next share depend over time, with the above-mentioned vital dilution of 2019 for instance. However over time, acquisitions are key to the belief’s development. Gladstone Land continues to pursue engaging acquisition alternatives, and there’s little cause to suppose its development will stop.
These fundamentals have led to long-term development as measured by adjusted FFO, though development has leveled off just lately. Income has grown by ~9X because the IPO – in a interval of simply over six years – and adjusted FFO has practically tripled in that point.
We anticipate adjusted FFO/share development of 5% per yr over the following 5 years.
Not surprisingly, Gladstone Land’s dividends will make up a good portion of whole future returns. This, in fact, is typical for a REIT. REITs are required by regulation to distribute no less than 90% of earnings within the type of dividends to shareholders, which is why so many trusts supply 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 a very good dividend monitor 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.
Based mostly 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 international inhabitants and falling provide of accessible farmland within the U.S. arrange a really favorable future for Gladstone Land. Provide and demand elements assist 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 pretty dividend yield of above 2%, with the potential for dividend will increase at a fee above inflation over time. Total, Gladstone Land is a pretty month-to-month dividend inventory.
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