3 Agriculture Stocks With Strong Yields

As we enter 2013 investors are faced largely with the same general uncertainty over the future of the U.S. economy that we saw last year. In light of this, a number of commodity investors have turned to dividend stocks to help maintain a sense of security and a steady stream of income for their portfolios. As the years have gone on and emerging markets have continued their exponential growth, the appeal of agriculture stocks has surged, especially for those that pay dividends. Below, we outline three agriculture stocks with strong yields for those looking for solid dividend stock investing ideas [for more agricultural news and analysis subscribe to our free newsletter].

1. Archer Daniels Midland (ADM)

Quick Stats (as of 1/3/2013)

  • P/E Ratio: 19.97
  • Dividend Yield: 2.45%
  • Payout Ratio: 49%
  • Last Dividend Payout: 12/6/2012

With a market cap topping $18.7 billion, ADM is one of the biggest names in the ag world. The firm stores, transports and merchandises agricultural commodities all around the world. Its current dividend yield of 2.45% may not be the most impressive in the space, but the firm has raised its dividend for 37 consecutive years, giving investors a sense of comfort and trust.

2. Monsanto Company (MON)

AgricultureQuick Stats (as of 1/3/2013)

  • P/E Ratio: 25.42
  • Dividend Yield: 1.56%
  • Payout Ratio: 32%
  • Last Dividend Payout: 10/26/2012

MON is the world’s leading producer of the herbicide glyphosate and is the second biggest producer of genetically engineered seeds. The stock has been on a tear since May of last year, gaining approximately 37% since its rally began. Monsanto has a market cap of $51 billion and trades more than 2.5 million shares on a daily basis. MON is also a member of the “Dividend Achievers” group, as it has increased its dividend for more than 25 consecutive years [see also Jim Rogers: The Agriculture Industry is Doomed].

3. Terra Nitrogen Company (TNH)

Quick Stats (as of 1/3/2013)

  • P/E Ratio: 13.36
  • Dividend Yield: 7.5%
  • Payout Ratio: 102%
  • Last Dividend Payout: 11/29/2012

As a REIT, this stock is certainly the most risky on the list, but its massive dividend yield of 7.5% is hard to ignore. The U.S.-based firm engages in the sale and production of nitrogen fertilizer products, making it a key component of the ag world. The high payout ratio of 102%, for those who need a refresher on dividend education, means that TNH’s dividend is by far the least stable on the list, though its payout dwarfs most of its competitors. For those who can stomach a bit of dividend volatility, this may be a great 2013 addition to your holdings.

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Disclosure: No positions at time of writing.

This entry was posted in Actionable Ideas, Agriculture, Asset Allocation, Dividends and tagged , , . Bookmark the permalink.

Commodity HQ is not an investment advisor, and any content published by Commodity HQ does not constitute individual investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities or investment assets. Read the full disclaimer here.

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