Updated on April 23rd, 2022 by Felix Martinez
Gladstone Land Corporation (LAND) is a Real Estate Investment Trust. REITs are popular investments because they typically pay high dividend yields. Gladstone Land is one of 208 publicly-traded REITs in the Sure Dividend database. You can see all 208 REITs here.
Gladstone Land has a dividend yield of 1.4%, which is not the highest yield around, especially for a REIT. On the positive side, the trust pays its dividends each month, rather than each quarter.
You can download our full Excel spreadsheet of all monthly dividend stocks (along with metrics that matter like dividend yield and payout ratio) by clicking on the link below:
Gladstone Land is a unique REIT. Many REITs own physical buildings across various industries like retail or healthcare. Gladstone Land, however, owns farmland, as well as vineyards.
This article will discuss the trust’s prospects and why it could be a valuable stock for diversification.
Gladstone Land Corporation is a real estate investment trust, or REIT, that specializes in the owning and operating of farmland in the U.S. The trust owns 164 farms, comprising about 112,000 acres of farmable land. Gladstone’s business is made up of three different options available to farmers, all of which are done on a triple–net basis.
Related: Agriculture stocks list and analysis.
The trust offers long–term sale-leaseback transactions, traditional leases of farmland, and outright purchases of farm properties. Gladstone’s portfolio has an appraised value of $1.4 billion.
Triple-net leases are appealing as the trust receives a steady stream of rental income, while the tenants are responsible for real estate taxes, insurance, and maintenance expenses. Some of the trust’s leases also include a revenue-sharing component, based on the crops harvested on the farms.
The REIT has enjoyed strong portfolio metrics such as occupancy and rental income growth.
Source: Investor Presentation
Gladstone Land’s investment focus is primarily on fresh produce, which it believes is the group with superior long-term fundamentals.
Commodities tend to yield less for farmers, so lessors of the farmland also tend to earn less. Focusing on the best plots of land that are used for the most profitable crops is an advantage for Gladstone Land.
U.S. farmland has proven to be a very strong investment over many years, characterized by stronger returns and lower volatility than other real estate investments, and the S&P 500 Index.
Gladstone reported fourth-quarter Fiscal Year 2021 earnings on February 22th, 2022, with results coming in better than expectations on both the top and bottom lines. Gladstone reported core funds–from–operations per share of $0.20. That was two cents better than expected and capped a very strong year of record earnings. In addition, revenue was up 16% to $22.8 million, which was more than $2 million ahead of expectations.
Operating revenue of $22.8 million was up from $19.6 million in the prior quarter, and Gladstone produced very strong operating cash flows of $12.02 million. That was more than triple the third quarter of 2021, which came in with just $3.39 million.
Net asset value ended the quarter at $14.31 per share, up from the previous quarter. Growth was primarily driven by a decrease in the fair value of fixed long–term borrowings, which was the result of higher market interest rates. In addition, the trust issued common shares at above estimate NAV, which generated a further gain.
Gladstone Land has positive long-term growth prospects, because it stands to capitalize on two major long-term trends. The first catalyst is the growth of the global population. The world population is around 7.5 billion, and strong growth rates are expected to continue.
This is a long-term tailwind for those who own farmland as a constantly-increasing population will need ever-increasing amounts of food.
At the same time, there is only so much land for farming. In fact, the supply of available farmland is actually decreasing in the U.S., as large amounts of farmland are converted to suburban use each year, for things like housing, schools, and offices.
The combination of falling supply and increasing demand has caused farmland prices to rise steadily for many years. As the supply and demand trends are not expected to reverse any time soon, Gladstone Land continues to have a strong future growth outlook.
Source: Investor Presentation
Future growth will be achieved through growth at existing properties, and by investing in new properties. For example, in the 2021 Gladstone Land acquired 27 new farms, consisting of 11,463 acres, for $14.7 million.
There is plenty of room for future M&A activities.
The U.S. farmland industry is highly fragmented, with significant family ownership. This means the environment for continued acquisitions remains fertile for Gladstone Land. Gladstone Land continues to make meaningful acquisitions, as seen above, and we believe this is a steady source of growth for the trust moving forward.
This strategy has led to a higher share count over time. With that said, acquisitions are key to the trust’s growth. Gladstone Land continues to pursue attractive acquisition opportunities, and there is little reason to think its growth will cease.
These fundamentals have led to long-term growth as measured by adjusted FFO, although growth has leveled off recently. Revenue has grown by ~9X since the IPO – in a period of just over six years – and adjusted FFO has nearly tripled in that time.
We expect adjusted FFO/share growth of 7% per year over the next five years.
Gladstone Land currently pays a monthly dividend of $0.0454 per share. The annualized payout of $0.54 per share represents a current dividend yield of 1.4%.
Gladstone Land has a good dividend track record. The company has paid over 100 consecutive monthly dividends since its initial public offering in January 2013 and has increased its dividend 22 times over the past 25 quarters.
Based on the expected adjusted FFO-per-share of $0.79, Gladstone Land has a projected dividend payout ratio of 68%. This is an important signal that the distribution is covered by underlying adjusted FFO.
The rising global population and falling supply of available farmland in the U.S. set up a very favorable future for Gladstone Land. Supply and demand factors support continued farmland investment. This means Gladstone Land should be able to continue growing its FFO and dividend over the long term.
The trust pays an attractive dividend yield of above 1.4%, with the potential for dividend increases at a rate above inflation over time. Overall, Gladstone Land is an attractive monthly dividend stock, despite having a relatively low yield.
If you are interested in finding more high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:
- The 20 Highest Yielding Dividend Aristocrats
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of 40 stocks with 50+ years of consecutive dividend increases.
- The 20 Highest Yielding Dividend Kings
- The Dividend Achievers List: a group of stocks with 10+ years of consecutive dividend increases.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500.
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Monthly Dividend Stocks List: contains stocks that pay dividends each month, for 12 payments per year.
- The 20 Highest Yielding Monthly Dividend Stocks
- The High Dividend Stocks List: high dividend stocks are suited for investors that need income now (as opposed to growth later) by listing stocks with 5%+ dividend yields.
The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly: