Iconic American author Mark Twain once said, "Buy land; they aren't making any more of it." And while Twain was more known for his literary skills as opposed to being an investor, his investing advice has actually held up pretty well for the last century-plus.
While land has often been seen as an alternative investment and more in the purview of private buyers than public shareholders, there are a number of attractive, publicly traded companies with substantial land holdings in the United States. Investors can buy them to not only beat inflation as land prices rise but also to generate income, as each of these three stocks offers a dividend payout.
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1. Alico
Publicly traded orange grower Alico (ALCO +0.30%) owns 84,000 acres of land across eight counties in
Florida. Orange juice is always in demand, and there are only a limited number of places where oranges can be grown in the United States. Alico has a strong foothold in this geography, so this land should remain valuable for a long time to come.
In addition to owning this large swath of desirable land, Alico pays investors a lucrative dividend and has been paying a quarterly dividend since 1974. After increasing its dividend by 178% in 2021, shares of Alico now yield approximately 5.3%, which is very compelling in today's market. While companies with high yields can sometimes be the result of a falling share price, Alico is a strong performer with a 33% year-to-date gain.
NASDAQ: ALCO
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2. Gladstone Land
Like Alico, Gladstone Land (LAND +0.00%) is another strong performer, with a 105% gain over the past year. While Gladstone doesn't pay as high of a yield as Alico (it currently yields 1.5%), Gladstone's dividend is interesting in that it is paid out on a monthly basis.
Like Alico, Gladstone is focused on agricultural land and has a presence in Florida, but Gladstone also owns farmland in California and elsewhere. The company owns 164 farms with a total of 113,000 acres of land across 15 states . These farms grow fruits and vegetables, as well as permanent crops like berries and nuts.
Gladstone notes that these crops are preferable to commodity crops because they are more profitable, less volatile, and less dependent on government subsidies. Another nice feature of Gladstone is that its leases to farmers are typically triple net leases, meaning the renter is responsible for not only rent but also maintenance, taxes, and insurance.
NASDAQ: LAND
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3. Texas Pacific Land
The last stock on this list, Texas Pacific Land (TPL 0.87%), is different from the previous two in that it owns land where the primary interest is oil production rather than agriculture. The 134-year-old company is one of the largest landowners in Texas with over 800,000 acres of land, including 100% exposure to the Permian Basin in Texas, America's oil hub.
Texas Pacific has an attractive business model in that it isn't engaged in the capital-intensive business of drilling for oil itself. Instead, it earns a royalty from the companies that drill on its land, including giants Chevron and ExxonMobil. Another plus is that TPL isn't as exposed to the underlying price of oil but rather receives the steady royalty payment from drillers, although admittedly the stock price is often affected by the price of oil.
While TPL's stock has suffered in the past from having a less common ownership structure (a trust as opposed to a C-corp) and a contentious proxy fight in 2019, the company has been working to undertake some shareholder-friendly measures such as instituting a $100 million share repurchase program and increasing its quarterly dividend to $3.00 a share.
While the current yield is under 1%, TPL has also paid special dividends in the past and has the room to increase this dividend in the future. Furthermore, the company has no debt and over $400 million of cash on its balance sheet.
NYSE: TPL
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Beat inflation and get paid
These three stocks offer a good way to get exposure to land ownership with a variety of lucrative uses, from orange growing and berry farming to oil royalties. Not only do these stocks offer a solid buffer against inflation as land prices rise with inflation, but they also help to generate dividend income.
