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Looking for a new investment opportunity? Agriculture and farmland stocks are a good way to invest in an industry which will almost always be in demand. While COVID-19 affected farmland stocks and investments, prices are going back up. To that end, agriculture stocks have traded high—even as wheat, corn and soybean prices pull back.
Farmland stocks aren’t just about investing in farmland, although many investors own shares of the land itself. Because agriculture touches many industries (fertilizer, machinery and more), there are plenty of new ways for you to invest.
Here’s an overview of the best agriculture and farmland stocks.
What are farmland stocks?
Farmland stocks are sold on exchanges just like other industries, and agricultural stocks are often considered defensive consumer staples. Demand might dip at times, but agriculture stocks aren’t as prone to turbulence as more volatile industries. For that reason, many investors treat them as defensive cornerstones, or invest in them to reap the dividend that they’re likely to continue paying even in tough markets.
When it comes to investing in agricultural stocks, investors can choose from companies focused across the spectrum: from products like fertilizer, feed, seed and equipment, to services like processing, livestock transportation and more. As an investor, you’ll want to do your own research on farmland stocks. What might be right for one investor could be a poor move for another.
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West Coast U.S. Farmland
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Open to non-accredited investors
The nine best agricultural stocks
If you’re new to agriculture and farmland stocks, start with the nine listed below. These stocks provide stable and profitable investment opportunities, and feature strong financials that give new investors peace of mind.
1. ScottsMiracle-Gro (NYSE:SMG)
While the stock chart for ScottsMiracle-Gro has been on something of a downward trend in 2022, it’s nevertheless a great investment for those seeking a long-term agricultural play. While the company has struggled with profitability this year, its sales are nonetheless impressive: $4.17 billion, with a gross margin of 27%. And, even in spite of profitability concerns, the company has yet to touch its impressive 6.18% dividend—a good sign for shareholders. The company’s forward P/E is an attractive 9.88, with a P/S of 0.58, making it a great buy with plenty of upside.
2. Bayer (OTC:BAYR.Y)
The only OTC stock on this list, Bayer is a powerhouse in the world of agriculture and farmland stocks. This $44.6 billion company offers investors an impressive 4.55% dividend yield, which has remained consistent for the past decade. The company’s financials offer investors a compelling case for growth, as well. In 2021, the company’s net income more than doubled, alongside its net profit margin. Bayer’s investment in crop sciences are powering the future of agriculture, making it a premier choice for ag-focused investors.
3. Nutrien (NYSE:NTR)
Nutrien isn’t a company most investors have heard of, but it’s one they’ll want to add to their portfolio. This sustainable Canadian crop input producer pulls in more than $47 billion in annual sales, with a 20% profit margin that all but guarantees its performance. Though its dividend is just under 3%, its consistent and represents less than 12% of the company’s earnings—which means it’s not only healthy, but primed for future growth. With a current P/E of 5 and an impressively low debt ratio, Nutrien is a must-add to ag-focused portfolios.
4. Deere & Company (NYSE:DE)
When you think “farm equipment,” you think “John Deere.” There’s a reason this company has remained a mainstay in the world of agriculture stocks: they lead the pack in terms of innovation and technology. The company has seen prolific sales growth and stable revenue over the last five years, with a 31% gross margin that translates into a reliable dividend payout for shareholders (1.31%). Deere & Company’s strong 33% ROE means it’s putting shareholder money to work wisely, and it’s a signal that you’d be wise to invest in this powerhouse agriculture company.
5. Archer-Daniels-Midland (NYSE:ADM)
While many stocks have fallen over the past 18-24 months, Archer-Daniels-Midland has weathered the storm to remain relatively stable. Not only that, it’s on the rise! The reason behind this farm products producer’s consistency? It has annual sales nearing $100 billion, with strong fundamentals across the board. At its current P/E, the company is actually a value play, and its healthy 1.93% dividend is more than enough reason to add it to your portfolio of consumer defensive holdings. Low debt, high upside and consistent demand all factor together to make Archer-Daniels-Midland a great agriculture stock in 2022.
6. The Toro Company (NYSE:TTC)
Like John Deere, Toro is a brand that’s synonymous with farmland stocks. Toro is a producer of industrial tools and accessories for farmland owners and, thus, a relevant holding for ag-focused portfolios. It’s a perfect fit for this list in that it offers investors a stable balance sheet, healthy sales (in excess of $4.3 billion annually), a stable dividend (1.35%) and healthy projected EPS growth into the foreseeable future. While Toro does carry more debt than other stocks on this list, it has the cash flow to easily support its short-term obligations.
7. Corteva Inc. (NYSE:CTVA)
Corteva Inc. is another farmland stock that hasn’t been all-too perturbed by the stock market turbulence of 2022. In fact, the company has seen EPS growth of more than 150% YTD! There’s a lot to love about this farmland stock, including its healthy annual sales of $16.7 billion and a gross profit margin of more than 40%. Corteva Inc. has a healthy dividend payment that hovers near 1%, with the possibility of growth thanks to the company’s virtually nonexistent debt load. Now’s the time to nab this stock before it reaches new highs in 2023!
8. Bunge Ltd. (NYSE:BG)
Anyone looking at the 52-week chart for Bunge Ltd. won’t be happy with what they see. However, investors looking for an agricultural diamond in the rough will see opportunity. This farm products retailer does more than $64 billion in annual sales, and while its margins are slim, it nonetheless has pricing power within its markets. Even more appealing is the company’s 2.96% dividend, which is safe thanks to the company’s low payout ratio. While there are some debt load concerns, the company’s low P/E makes it a potential value play with excellent upside—especially given its projected target price by banking analysts.
9. AGCO Corporation (NYSE:AGCO)
If you’re familiar with farmland stocks, AGCO Corporation is a familiar name. This industry giant does more than $10 billion in annual sales and has a gross operating margin in excess of 20%, making it a steady and stable business. With debt levels coming down and a P/E that remains depressed with the rest of the stock market, 2022 could signal a great entry point for investors seeking a strong consumer defensive play in the agricultural sector. While the 0.97% dividend is low, it has the potential to grow in the coming years—especially based on projected sales growth.
How do you get started with farmland stocks?
Anyone can invest in farmland stocks, especially if you already have a brokerage account. Instead of buying and managing an entire farm, investors can pick and choose specific companies for farmland stock investments. This has made farmland investing accessible to more people, especially when you consider all the different branches of agriculture stocks available.
From consumer brands to research and development teams, there’s sure to be a farmland stock that’s right for you. Consider market and farming trends to decide where you want to take a calculated risk. For example, pesticides are in high demand, but the frequent litigation can cut into profits. Meanwhile, vertical farming might not be booming yet—but its steady growth indicates a good potential long-term investment.
As always, if you have a financial advisor, be sure to get their opinion on how these farmland stocks are performing.
Invest in farmland stocks for a better food future
Investing in farmland is a relatively low-risk venture. Because food security is still an issue worldwide, the demand for farmland, machinery and related industries is unlikely to decline anytime soon.
Whether you stick with tried-and-true consumer brands, major chemical producers or want to get in on a more sustainable future, farmland stocks have something for everyone. As long as you research carefully and follow market trends, the nine farmland stocks outlined above stand to represent a very safe bet for ag-focused (and new) investors.