When researching agricultural companies, it cannot be easy to see the big picture because there are many types of farming companies. You might consider buying companies specializing in fertilizers, seeds, agricultural chemicals, livestock feed, animal foods, ethanol, dairy products, poultry, eggs, beef, pork, or poultry.

There are a lot of companies that sell agriculture stocks. You can start by looking at companies known for making great products and having a lot of brand value. It’s also good if they have been around for a long time.

Scotts Miracle-Gro (NYSE: SMG)

Scotts Miracle-Gro [SMG] has a big advantage over other companies: its brand value. People know it makes lawn and garden products, which it produces and sells. Suppose you want to buy fertilizers, grass seed products, outdoor cleaners, or disease-control products. In that case, Scotts Miracle-Gro [SMG] is an excellent place to start.

Gardeners know they can trust Scotts for gardening products, plant foods, garden soil, and potting mixes. Scotts has embraced the trend toward organic products with a lineup of offerings.

Scotts is a very successful company. They have a lot of different products and services that make them money. People might not know that they are buying Scott’s product. Still, they probably are because Scotts have so many famous brands like OxiClean, Grub-Ex, Tomcat, Roundup, SuperSoil, Earthgro, PatchMaster, and more.

Scotts Miracle-Gro sells to many businesses, like hardware stores, warehouse clubs, and home centers. It also has a direct sales force that goes after hydroponic distributors and retailers. Another good thing about Scotts is that it offers a dividend (a payment to shareholders) that is more than 2%.

CF Industries (NYSE: CF)

CF Industries is a company that makes fertilizer, including products like ammonia, urea, ammonium nitrate, and ammonium nitrate.

Like Scotts Miracle-Gro, CF Industries has multiple revenue sources, including diesel exhaust fluid, nitric acid, and aqua ammonia.

CF Industries sells to many different customers, including farmers, industrial users, fertilizer distributors who are not part of a company, and cooperatives. CF Industries is less risky because it has multiple revenue streams. And like SMG, CF Industries has been around for a long time.

Investors who are looking for income can find a good return from SMGs. The company offers a dividend of 2.75% (as of the time this article was written). You could also make more money by selling call options against your shares and creating covered call strategies.

DBA

The PowerShares DB Agriculture ETF is a high-liquidity ETF issued by Invesco. This fund is a key consideration for investors looking to trade ETFs.

The agriculture ETF aims to mirror the returns of the Diversified Agriculture Index Excess Return (DBIQ). This ETF invests in futures contracts on agricultural commodities, which helps to keep liquidity high.

Another agricultural ETF worth looking into is the iPath Bloomberg Grains Total Return ETN. It has a lower expense ratio than the PowerShares DB Agriculture ETF. It has performed better this year by a wide margin.

However, the past ten years have not been good for most agriculture exchange-traded funds. It is likely because of the current macroeconomic climate. However, commodities usually do not stay depressed for multiple decades. It may mean that the next ten years will be better for returns.

Agriculture Stocks List

Investing in agricultural stocks is because the global population continues to grow and demand more protein. It means that we need more livestock feed, fertilizers, and seeds. However, crops are affected by climate change. It becomes increasingly difficult to farm arable land if the temperature becomes too hot or cold.

The companies that will do the best in the future are the ones that have a good balance sheet, plenty of cash, and good growth opportunities.

Here is a list of agriculture stocks with some of the biggest and most successful companies.

  • Mosaic [MOS] – fertilizers
  • Tyson Foods [TSN] – poultry, pork, beef
  • Pilgrim’s Pride [PPC] – poultry
  • Cal-Maine Foods [CALM] – eggs
  • Archer Daniels Midland [ADM] – livestock, ethanol, food
  • Nutrien [NTR] – fertilizers

Frequently Asked Questions About Agricultural Stocks

Is Agriculture a Good Investment?

Farmland is a good investment in an inflationary environment. Between 1992 and 2020, farmland provided average annual returns of nearly 11%, including income and price appreciation.

How Do I Buy Farmland Stock?

An investor can invest in a farming-focused real estate investment trust (REIT) to come close to owning a farm. It includes Farmland Partners Inc. (FPI) and Gladstone Land Corporation (LAND). These REITs typically purchase farmland and then lease it to farmers.

What Is the Best Way to Invest in Farmland?

One way to invest in farmland is to purchase usable cropland or pastureland and rent it out to a farmer or rancher. This method of investing in farming has a significant upfront cost, as the investor would need to purchase a large plot of land.

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