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For those looking to gain exposure to farmland as an asset class, the publicly traded REIT Farmland Partners (FPI) may seem tempting.
As a REIT, it trades on the same exchanges as stocks giving you a high level of liquidity. It is perhaps the easiest way out there to gain exposure to farmland.
However, publicly traded REITs come with a few downsides:
- Since they trade on the same exchanges as stocks, they are susceptible to the same ups and downs. Publicly traded REITs are heavily correlated with the stock market.
- Often times, these REITs underperform private or less liquid real estate investments.
Nonetheless, should you be interested, there are a number of things you should know about Farmland Partners.
|$15,000 To $25,000||View Investments|
|$100 (REITs)||View Investments|
What Is Farmland Partners (FPI)?
Farmland Partners Inc is a publicly traded real estate investment trust. The company owns high quality farmland throughout North America and is looking to acquire more.
Investors in the trust are collectively helping to address the growing demand for food, feed, fiber and fuel.
Farmland Partners works directly with their tenants to help them lower costs and improve their farms to maximize profitability. This also helps to mitigate the risk of default, seeing as investors are collectively the landlord.
As of August 4th 2021:
- Farmland Partners Inc owns approximately 157,000 acres of land
- This is across 16 different states in the US
- The land is currently being farmed by over 100 tenants
- These tenants are collectively growing 26 different major commercial crops
Right off the bat, investing in a portfolio of farmland versus one individual farm is going to give you the benefit of diversification. Spreading out exposure across multiple geographies and crops helps to mitigate many of the unique risk factors related to farming.
How To Buy A REIT
Within a couple of minutes, you can purchase a farmland REIT for under $100!
Additionally, with that $100 investment, you are diversifying across dozens of farms. If things go south at one of the farms owned by the REIT, it's likely that the other farms will even out the returns. As a result, you'll take advantage of the consistent returns of an asset class that has continued to outperform the stock market.
To buy any farmland REIT, you'll need a trading app that supports buying and selling REITs.
Another plus is using a commission free brokerage that is also user friendly. You can purchase Farmland Partners (FPI) on Robinhood commission free. You can even buy fractional shares.
Plus, Farmland Riches readers can get free stocks when they sign up!
One of the common complaints investors have about REITs is the lack of transparency. Simply put, it can be difficult at times to determine what you are actually owning.
Farmland Partners has a decent website with a map that shows you every single farm within the portfolio. You can click on each state and find the actual farms you are investing in.
While they do not have as much data as other farmland investments such as AcreTrader, it is definitely better than most REITs.
All REITs are required to pay out dividends to shareholders, and Farmland Partners is no exception.
- Farmland Partners currently pays a quarterly dividend in the amount of $0.05 per share
- However, back in 2018 they used to pay a dividend of $0.1275 per share
- The dividend has decreased significantly
- Based on the share price of $11.78, they are currently paying a yield of 1.7%
A few years ago, Farmland Partners was under a short seller attack. Often times, large hedge funds try to manipulate share prices with short selling and other techniques.
After their IPO and trading at around $13 per share, the stock fell as low as $4.50 per share in 2018.
Now, the stock is trading around $11 to $12 per share. Perhaps the short sellers have covered their positions.
Revenue And Gross Profit
Investors should be aware that Total Revenue and Gross Profit have been on a decline for this company from 2018 to today.
- 2018: $56,069,000
- 2019: $53,564,000
- 2020: $50,689,000
- TTM: $50,110,000
- 2018: $48,235,000
- 2019: $44,740,000
- 2020: $39,952,000
- TTM: $39,807,000
Is Farmland Partners (FPI) A Buy?
Before investing in this REIT, investors should be well aware of the declining revenue, gross profit and reduction in the quarterly dividend.
The stock is still trading at a lower price than it has previously, however the recent run up is likely attributed to renewed interest in farmland as an asset class. Billionaires like Bill Gates have been buying farmland left and right, making it a trendy investment all of the sudden.
While REITs are the easiest way to gain exposure to farmland, they are not the only way. Check out our article on the best farmland investing platforms for more options.
Should you decide to invest in Farmland Partners, you can buy fractional shares of FPI on Robinhood commission free!