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‘Remarkable resilience’ in Aussie farmland a tailwind for ASX agriculture shares

When you think of ASX resource shares, gold shares or iron ore come to mind. But ASX agriculture shares have a lot to offer investors.
The post ‘Remarkable resilience’ in Aussie farmland a tailwind for ASX agriculture shares appeared first on The Motley Fool Australia. –

Agricultural ASX share price on watch represented by farmer in field looking at tablet computer

When you think of ASX resource shares, the likes of S&P/ASX 200 Index (ASX: XJO) mining giants Fortescue Metals Group Ltd (ASX: FMG) and BHP Group Ltd (ASX: BHP) probably spring to mind.

Or perhaps the host of ASX gold shares trading on the index.

But Australia is rich not just in hard commodities like iron ore and gold. The lucky country also has a great wealth in its expansive farmlands. With a number of quality ASX agricultural shares investors can consider.

And, according to the latest report from the ANREV Australian Farmland Index, the fourth quarter 2020 returns for managed investments in Aussie farmlands came in strong, despite the ongoing global pandemic. Which could provide some welcome tailwinds for ASX agriculture shares.

28% returns from annual farmland

ANREV’s index tracks some $1.1 billion worth of agricultural assets, including farming assets held by Rural Funds Group (ASX: RFF)

As Institutional Real Estate Inc reports, the quarterly performance of annual farmland, “which includes broadacre grain and oilseed farming and livestock grazing” had its best returns since ANREV launched the index.

The annualised returns on the grazing and annual cropland came in at an impressive 28.37%, with 13.34% coming from increased income and 15.03% from capital growth.

The ANREV report credited rising beef cattle prices and an above-average winter crop harvest in the eastern states for much of the increased returns.

Amélie Delaunay, director of research and professional standards at ANREV said, “In the face of the unprecedented turmoil of 2020, investments in Australian farmland showed remarkable resilience compared to other asset classes.”

A leading ASX agricultural share

As mentioned above there are a number of quality agricultural shares trading on the All Ordinaries Index (ASX: XAO).

Rural Funds Group, whose assets make up part of the ANREV index, counts among those.

Rural Funds holds and leases agricultural property and equipment. Its agricultural holdings include cattle, vineyards and cropping. As far as its leases go, the company is well-positioned with an average weighted lease expiry (WALE) of 11.1 years.

Rural Funds has a market cap of $801 million and is well-known among ASX dividend investors for a lengthy track record of regular and growing dividends. At the current share price Rural Funds pays an annual dividend yield of just over 4.6%, unfranked.

The Rural Funds share price, down 2% today, is up 24% over the past 12 months.

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*Returns as of February 15th 2021

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ‘Remarkable resilience’ in Aussie farmland a tailwind for ASX agriculture shares appeared first on The Motley Fool Australia.

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