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Want Income? Here Are the Best Ways to Invest in Agriculture

By Lou Whiteman - Feb 6, 2021 at 8:00AM

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You don't have to raise livestock to get exposure to the business of farming.

For investors focused on income, agriculture offers an attractive proposition. Farms have been a part of society since the beginning, and tend to produce a steady stream of income year after year to help bolster a portfolio.

Alas, it's tough to go out and buy a farm just for the sake of the dividends. 

In this video from Motley Fool Liverecorded on Jan. 28, Industry Focus host Nick Sciple and Motley Fool contributor Lou Whiteman discuss ways individual investors can gain exposure to farms and farmland in their portfolio, and why it might be a good idea to do so. 

Nick Sciple: Any advice for folks who are interested in investing in this kind of agriculture space? If you don't want to pick individual stocks, maybe ETFs to pay attention to, things like that.

Lou Whiteman: Yeah. I think if nothing else, the point I think we've tried to make here today is that there is value here, especially for income. There's the old expression that land is important, because they're not making more of it. It still applies. Agriculture is key to our existence. They're not making more land. This is a business that over the long term can work, but has a lot of risks. There are some interesting and awesomely tickered, I should say, ETFs in the sector. I'm really interested in the Market Vectors Agribusiness (MOO -1.64%), which has a ticker of MOO, M-O-O. I like that it's got 60 or so stocks. You get some exposure to animal health, Zoetis and Idexx, some of those which I know are popular here. But you also get a lot of the seeds and chemicals in a pretty diverse basket. There's another one, VEGI (VEGI -3.66%), which is an ETF that's a little more concentrated. Both of them have companies like John Deere in it too, which is one we didn't get to, but which is a service provider to ag, which is very interesting. The Farmland REITs, I think looking at that, I like land. There's also Farmland Partners (FPI -1.87%), which is FPI, which I think is the same idea although I don't know if it's worked out as Gladstone Land (LAND -5.66%), but this is just an area where the cloud isn't working so much or if you're looking for a little more income. Some way to get into this and have some exposure for a 20-30 year portfolio, I think makes a lot of sense and it's worth looking at.

Sciple: Absolutely. It gives you exposure, as we said earlier. This is an industry that is not going to trade correlated with the rest of the markets or particularly for an income investor, an area to pay attention to. Again, I don't think farming is going to go away. [laughs] An easy bet to predict. The beginning of civilization was farming. I think, if you're betting on civilization sticking around, farming is going to stick around too. Interesting area to invest in if you're looking for something uncorrelated that can give you some steady returns over time.

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Stocks Mentioned

VanEck Vectors ETF Trust - VanEck Vectors Agribusiness ETF Stock Quote
VanEck Vectors ETF Trust - VanEck Vectors Agribusiness ETF
MOO
$94.33 (-1.64%) $-1.57
Gladstone Land Corporation Stock Quote
Gladstone Land Corporation
LAND
$23.15 (-5.66%) $-1.39
iShares, Inc. - iShares MSCI Global Agriculture Producers ETF Stock Quote
iShares, Inc. - iShares MSCI Global Agriculture Producers ETF
VEGI
$43.16 (-3.66%) $-1.64
Farmland Partners Inc. Stock Quote
Farmland Partners Inc.
FPI
$14.16 (-1.87%) $0.27

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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