Billionaires like Jeff Bezos and Bill Gates are making big bets on farmland –

Billionaires like Jeff Bezos and Bill Gates are making big bets on farmland - here are 2 easy ways you can access it

Billionaires like Jeff Bezos and Bill Gates are making big bets on farm land – here are 2 easy ways you can access it too

Fear is taking away. The S&P 500 lost about 16% of its value in 2022, while the tech-heavy Nasdaq lost 26% over the same period.

Investors are concerned about rising interest rates, supply chain problems and the economic downturn.

Billionaires are nervous too. But they have access to an asset class that has a proven track record of asset protection: agricultural land.

Here’s why the world’s richest investors are buying agricultural land and how you can add exposure to the sector.

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Benefits of agricultural land

Several factors make agricultural land a uniquely stable resource class.

For one, the underlying product is absolutely essential. Demand for wheat, soybeans, canola seeds and maize will never go up. And this year, the ongoing conflict in Eastern Europe with protectionist policies in India has created a global supply shock. Food prices have skyrocketed.

Agricultural landowners benefit from this rise. This makes it a highly effective hedge inflation – even better than most stocks and bonds. So it’s no wonder that billionaires have invested in space (so much) in recent years.

Bill and Melinda Gates – before their divorce – accumulated about 270,000 acres of farmland in less than a decade. Amazon founder and chairman Jeff Bezos has amassed 420,000 acres of land in recent years.

Other notable agricultural investors include Ted Turner and Thomas Peterfi.

According to data released by the US Department of Agriculture, about 80% of leased farm land is owned by investors who do not cultivate it themselves. This ratio could increase because more investors are involved and barriers to entry drop.

Investment in agricultural land

Direct investment in agricultural land is costly and complex. But retail investors can add exposure to agricultural land through certain publicly traded real estate investment trusts.

Gladstone Land (LAND) is one of the few “pure-play” Farmland REITs on the market. The company owns 112.5 million acres of agricultural land which is leased on triple-net basis to farmers who have excellent credit history and experience. According to the company’s latest quarterly report, its occupancy rate is 100%.

Gladstone is currently offering a 2.2% dividend yield.

Farmland Partners (FPI) is another REIT that focuses on agricultural land across the United States. The company owns 185,700 acres of land in 19 states and operates more than 100 tenants producing 26 major commercial crops. Although much of the portfolio is agricultural land, it also owns groundwater resources and crop facilities throughout its assets. The stock offers a 1.7% dividend yield.

Investing in agricultural land through these two REITs cannot add much passive income to your portfolio. However, they do have the potential to provide capital adequacy and inflation protection.

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This article provides information only and should not be construed as advice. It is provided without any warranty.

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