Updated on September 11th, 2024 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 4.0%, 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, and the yield is still meaningfully higher than what the S&P 500 offers.
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.
Business Overview
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 roughly 160 farms, comprising over 110,000 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.
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 its second-quarter earnings on August 8, 2024, surpassing expectations on both revenue and profits. Funds-from-operations (FFO) were $0.14 per share, beating estimates by $0.02 and improving from $0.13 a year earlier.
Revenue reached $21.3 million, a slight increase year-over-year and $1.26 million above estimates. Operating expenses rose to $13.4 million from $13 million in the first quarter, remaining unchanged from the previous year.
Net asset value per share decreased to $17.59, down from $18.50 in Q1. This decline was mainly due to lower valuations of certain farms, partly offset by higher values in the trust’s long-term borrowings and preferred stocks.
Gladstone raised its dividend for the 10th year in a row by 0.2%, keeping the annual dividend at $0.56. Following first-half results, the FFO-per-share estimate has been reduced by $0.01.
Growth Prospects
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 7.9 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 as 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.
We expect adjusted FFO/share growth of 3.5% per year over the next five years.
Dividend Analysis
Gladstone Land currently pays a monthly dividend of $0.0467 per share. The annualized payout of $0.56 per share represents a current dividend yield of 4.0%.
Gladstone Land has a good dividend track record. The company has paid consecutive monthly dividends since its initial public offering in January 2013 and has increased its dividend every year.
Most importantly of all, the company’s adjusted funds from operation are currently covering the dividend payouts quite easily and are expected to continue doing so for the foreseeable future.
Final Thoughts
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 4.0%, 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.
Don’t miss the resources below for more monthly dividend stock investing research.
- The Monthly Dividend Stocks List
- 20 Highest Yielding Monthly Dividend Stocks
- 10 Cheapest Monthly Dividend Stocks
- 10 Safest Monthly Dividend Stocks
- 3 Top ‘Hold Forever’ Monthly Dividend Stocks
And see the resources below for more compelling investment ideas for dividend growth stocks and/or high-yield investment securities.
- Dividend Kings: 50+ years of rising dividends
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- Dividend Aristocrats: 25+ years of rising dividends and in the S&P 500
- Dividend Achievers: 10+ years of rising dividends and in the NASDAQ
- High Dividend Stocks: 4%+ dividend yields
- Blue Chip Stock: Kings, Aristocrats, and Achievers
- MLPs: List of MLPs and more
- REITs: List of REITs and more
- BDCs: List of BDCs and more