Times are changing again. Sometimes I wonder how much of life is cyclical, like the stock market. Students of history will recognize trends into and then out of cities throughout the years. An investment type that always seems to treat its investor well is real estate. It’s popular to buy low, fix up the property, then rent, or sell it high, but we are going to discuss a different real estate investment: farm land and water rights. In essence, the strategy is to buy land that’s good for farming with its own water source, then rent it to farmers.
The Roaring 2020s started off with a raging high stock market which dropped dramatically early in the year along with business and consumer buying as unemployment numbers rose during the virus lockdowns of early 2020. As retail investors started joining the Wall Street game, the market began to reach crazy high valuations through much of 2020 and early 2021. Analysts across the world, including famous investors, are claiming the market is at extremely inflated highs and will crash any day now. Low interest rates and inflation are keeping investors’ profits low, causing investors to rethink their hold strategies for stocks and bonds.
So, where to invest in the Roaring ‘20s? What stocks can perform long term, and what sort of businesses will be worth the investment in the 20s and beyond? Some are saying land and water! Bill Gates, one of the savviest American investors has become the largest landowner in America, and he’s placing his bets on the growing population’s need for more and more fresh food to sustain the 10.9 billion people future population growth predictions claim will inhabit our planet.
Water
You can buy land with water rights and then lease them for fishing and/or sell the water in the coming years. You can also buy stock market ticker AWK.
AWK – American Water Works Inc.
This American water company is the largest and most geographically diverse water company in the USA that’s publicly traded. Their history goes back to 1886. Today, they service over 15 million people in 46 US states. In March of 2021, they increased their quarterly dividend from $0.55 to $0.60 per share. They claim to continue to be the leader in dividend growth. Their dividend payments are due June 1st 2021. Their sustainability goals include using pumps which require less energy and use water more efficiently.
Land
You can buy land in farming regions with existing farm rentals like California and Florida, where farming is the predominant economy and fruit and fresh produce are grown that feed the United States. You can lease the land to farmers, or would-be farmers based on the fair market rate, or you can invest in a publicly traded company who does just that with stock market ticker LAND.
LAND – (REIT) Gladstone Land
This company is known for owning and leasing land across the United States of America. They offer farmers three options: they offer long-term sale-leaseback allowing farmers to use the money from the sale to invest in infrastructure, they purchase land to lease to farmers who want access to land to cultivate but don’t have the money to purchase it, and they also buy farmland from farmers looking to leave the industry or continue farming, but with a lease. Their targets are fruit and vegetables crop land where established rental markets are strong. They pay dividends monthly, $0.045 cents per share.
The Gladstone Land Philosophy
Our goal is to build the premier farmland real estate company focused on the ownership of high quality farms and farm-related properties that are leased on a triple-net basis to tenants with a strong operating history and deep farming resources. All our farms have abundant water sources and are currently 100% occupied. (source: gladstonefarms.com)
I’m not saying you have to buy these stocks, but if you want to diversify, they are a good option. Maybe your next big investment will be land with a nice big lake on it. Do your own research to decide which investment strategy is best for you. I’m not a financial advisor, I’m in technology sales, but I do know that if Bill Gates and Warren Buffett are buying up farmland, it’s probably a good investment. Have fun researching and finding inspiration for your next investment! Always make sure it’s the right move for you, both psychologically and economically, and never invest in anything you don’t believe in. You need to be mentally in the game, otherwise the stress will exhaust you. It’s important to love what you invest in, and never just follow what others are doing.
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