Monthly Dividend Stock In Focus: Gladstone Land

Up to date on June tenth, 2021 by Bob Ciura

Gladstone Land Company (LAND) is a Actual Property Funding Belief. REITs are common investments as a result of they usually pay excessive dividend yields. Gladstone Land is considered one of 166 publicly-traded REITs within the Certain Dividend database. You may see all 166 REITs right here.

Gladstone Land has a beautiful dividend yield of two.1%, which isn’t the best yield round however it’s nonetheless higher than the ~1.4% common yield of the S&P 500 Index. As well as, the belief pays its dividends every month, reasonably than every quarter.

You may obtain our full Excel spreadsheet of all month-to-month dividend shares (together with metrics that matter like dividend yield and payout ratio) by clicking on the hyperlink beneath:

Gladstone Land is a singular REIT. Many REITs personal bodily buildings throughout varied industries like retail or healthcare. Gladstone Land, nonetheless, owns farmland, in addition to vineyards.

This text will focus on the belief’s prospects and why it could possibly be a priceless inventory for diversification and excessive dividend earnings.

Enterprise Overview

Gladstone Land Company is an actual property funding belief, or REIT, that focuses on the proudly owning and working of farmland within the U.S. The belief owns 141 farms, comprising about 104,000 acres of farmable land. Gladstone’s enterprise is made up of three completely different choices accessible to farmers, all of that are carried out on a triple–internet foundation.

The belief presents lengthy–time period sale leaseback transactions, conventional leases of farmland, and outright purchases of farm properties. Gladstone’s portfolio has an appraised worth of $1.2billion.

Triple-net leases are interesting because the belief receives a gentle stream of rental earnings, whereas the tenants are accountable for actual property taxes, insurance coverage, and upkeep bills. Among the belief’s leases additionally embody a revenue-sharing part, primarily based on the crops harvested on the farms.

The REIT has loved robust portfolio metrics resembling occupancy and rental earnings development.

Supply: Investor Presentation

Gladstone Land’s funding focus is totally on recent produce, which it believes is the group with superior long-term fundamentals.

Commodities are inclined to yield much less for farmers, so lessors of the farmland additionally are inclined to earn much less. Specializing in the perfect plots of land which are used for essentially the most worthwhile crops is a bonus for Gladstone Land.

U.S. farmland has confirmed to be a really robust funding over a few years, characterised by stronger returns and decrease volatility than different actual property investments, and the S&P 500 Index.

Gladstone reported first quarter earnings on Could 12th, 2021, with outcomes coming in higher than expectations on each the prime and backside traces. Gladstone reported core funds–from–operations per share of $0.18, up 12.5% from the earlier quarter.

Internet asset worth ended the quarter at $12.69 per share, up 3.8% from the December quarter. Development was primarily pushed by a lower within the truthful worth of mounted lengthy–time period borrowings, which was the results of larger market rates of interest. As well as, the belief concernd widespread shares at above estimate NAV, which generated an extra acquire.

Development Prospects

Gladstone Land has optimistic long-term development prospects, as a result of it stands to capitalize on two main long-term tendencies. The primary catalyst is development of the worldwide inhabitants. The world inhabitants is round 7.5 billion, and robust development charges are anticipated to proceed.

This can be a long-term tailwind for those who personal farmland as a constantly-increasing inhabitants will want ever-increasing quantities of meals.

On the similar time, there’s solely a lot land for farming. In actual fact, the availability of obtainable farmland is definitely lowering within the U.S., as giant quantities of farmland are transformed to suburban use annually, for issues like housing, faculties, and places of work.

The mix of falling provide and growing demand has brought about farmland costs to rise steadily for a few years. As the availability and demand tendencies aren’t anticipated to reverse any time quickly, Gladstone Land continues to have a robust future development outlook.

Supply: Investor Presentation

Future development shall be achieved via development at present properties, and by investing in new properties. For instance, within the 2021 first quarter Gladstone Land acquired three new farms, consisting of 233 acres, for $5.6 million.

There may be loads of room for future M&A exercise.

The U.S. farmland business is very fragmented, with important household possession. This implies the setting for continued acquisitions stays fertile for Gladstone Land. Gladstone Land continues to make significant acquisitions, as seen above, and we imagine it is a regular supply of development for the belief transferring ahead.

This technique has led to the next share rely over time, with the above-mentioned important dilution of 2019 for example. However over time, acquisitions are key to the belief’s development. Gladstone Land continues to pursue engaging acquisition alternatives, and there’s little purpose to suppose its development will stop.

These fundamentals have led to long-term development as measured by adjusted FFO, though development has leveled off not too long ago. Income has grown by ~9X because the IPO – in a interval of simply over six years – and adjusted FFO has almost tripled in that point.

We anticipate adjusted FFO/share development of 5% per yr over the subsequent 5 years.

Dividend Evaluation

Not surprisingly, Gladstone Land’s dividends will make up a good portion of complete future returns. This, after all, is typical for a REIT. REITs are required by regulation to distribute at the very least 90% of earnings within the type of dividends to shareholders, which is why so many trusts provide a really excessive dividend.

Gladstone Land presently pays a month-to-month dividend of $0.045 per share. The annualized payout of $0.54 per share represents a present dividend yield of two.1%.

Gladstone Land has an excellent dividend observe document. The corporate has paid 100 consecutive month-to-month dividends since its preliminary public providing in January 2013, and has elevated its dividend 22 occasions over the previous 25 quarters.

Based mostly on anticipated adjusted FFO-per-share of $0.65, Gladstone Land has a projected dividend payout ratio of 83%. This is a vital sign that the distribution is roofed by underlying adjusted FFO.

Last Ideas

The rising world inhabitants and falling provide of obtainable farmland within the U.S. arrange a really favorable future for Gladstone Land. Provide and demand elements help continued farmland funding. This implies Gladstone Land ought to be capable of proceed rising its FFO and dividend over the long run.

The belief pays a beautiful dividend yield of above 2%, with the potential for dividend will increase at a charge above inflation over time. Total, Gladstone Land is a beautiful month-to-month dividend inventory.