The U.S. and most global stock markets have performed very well over the first three quarters of 2024. With central banks around the world cutting rates, indications for continued growth are promising. However, this market is not without risk. There is uncertainty about how inflation and the economy will respond to falling rates, and the equity markets are facing increasing and unpredictable volatility.
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In light of this, retail and institutional investors are taking a fresh look at agriculture stocks. The agriculture industry has been seen as a slow-growing and somewhat boring segment of the economy, but that attitude is changing. Modern agriculture companies are on the leading edge of technology and innovation. And, with the world’s population expected to exceed 9 billion by 2050, the demand for high-quality food is projected to soar and remain high for the foreseeable future. In short, agriculture stocks are well positioned to be critically important on the world economic stage.
When Wall Street talks about agriculture stocks, they are not just talking about food producers. The agriculture industry encompasses a broad range of companies that can include almost all companies related to farming and food distribution. They can include chemical companies that make sustainable fertilizers and safe insecticides, biotechnology firms that work to develop new, more productive and nutritious produce, equipment manufacturers that make high-tech farm machinery and even artificial intelligence software developers who help farmers leverage technology to use water, land and resources more efficiently.
In short, the agriculture sector represents a tremendous opportunity, and right now might be the perfect time to buy. If you’re looking to grow your capital by investing in an innovative industry with solid demand fundamentals, the stocks and exchange-traded funds, or ETFs, on this list may be able to help you capitalize on the global trends that are poised to push agriculture stocks higher.
| Agriculture Stock/ETFs | Forward Annual Dividend Yield* |
| Corteva Inc. (ticker: CTVA) | 1.2% |
| Archer-Daniels-Midland Co. (ADM) | 3.5% |
| Nutrien Ltd. (NTR) | 4.4% |
| iShares MSCI Agriculture Producers ETF (VEGI) | 2.4% |
| Invesco DB Agriculture Fund (DBA) | 3.7% |
| Zoetis Inc. (ZTS) | 0.9% |
| Tractor Supply Co. (TSCO) | 1.5% |
*As of Oct. 10 close.
Corteva Inc. (CTVA)
CTVA is as close to a pure play on the agriculture industry as an investor can find. This $39 billion firm is a world leader in seeds and crop protection products.
The seed division is focused on developing crop seeds that optimize yields for farmers and, ultimately, food consumers. They use advanced biotech science to produce seeds that are more resistant to harsh weather, diseases and insects and that use water more efficiently. They also provide farmers with digital software solutions that help farmers make better decisions about how, when and where to plant the seeds they produce.
The crop protection division makes herbicides and soil additives that protect crops against weeds, insects and destructive diseases. This division also provides advanced nitrogen management fertilizers.
Morgan Stanley, Morningstar and CFRA Research are all bullish on the stock. Morgan Stanley has an “overweight” rating on CTVA. Morningstar and CFRA both rate the company a “buy.”
CTVA has an annual forward dividend of 68 cents a share, which equates to a yield of 1.2%.
Archer-Daniels-Midland Co. (ADM)
ADM is a $27 billion company that’s a premier player in agricultural processing, plant and food nutrition, commodities trading and many other aspects of the agriculture industry.
ADM is involved in all aspects of agriculture, from growing foods and nurturing livestock to transportation, storage, processing and marketing many of the products that make up the world’s food supply. Most of the company’s customers are farmers, ranchers and food processors in the U.S., but ADM is also prominent in Latin America, Canada, Europe and other regions internationally.
ADM is organized into three main segments: Agriculture Services and Seed Oils, Carbohydrate Solutions, and Nutrition. Their list of food and food-related products seems almost endless; they produce vegetable and seed oils that are used in cooking, baking and even as an energy source for industrial customers. ADM is a major producer of peanuts and peanut-derived products. They make animal feed, food coloring, flavor enhancers, extracts and too many other products to list here.
One of the most interesting aspects of the company is its financial activities. ADM generates significant revenue through commodity trading and by operating an agriculture futures brokerage.
ADM is a member of the Dividend Aristocrats. The company has raised its annual dividend for 52 consecutive years. The stock is currently yielding 3.5% based on its forward annual dividend of $2 a share.
Nutrien Ltd. (NTR)
NTR is a $24 billion agriculture company that offers only three products: potash, nitrogen and phosphates. These three products — which NTR produces in liquid and granular form — are sold to fertilizer companies that produce different formulations of lawn, plant and crop fertilizers. To a lesser extent, they sell phosphates to animal nutrition companies who use it as a supplement in their livestock feed and medicines.
Global fertilizer demand is strong and growing rapidly. As a result, Wall Street is expecting good revenue growth from NTR. Analysts are estimating the company will generate sales of $25.7 billion in 2024 and grow that figure by about 3% to $26.5 billion in 2025.
Earnings are also expected to grow. Earnings per share for 2024 are estimated to be $3.76 in 2024 and increase 5% to $3.95 for 2025.
The stock also features a dividend yield of 4.4%.
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iShares MSCI Agriculture Producers ETF (VEGI)
Agriculture investors who want professional stock selection and enhanced diversification may want to consider an ETF rather than individual stocks. VEGI is a small ETF with assets of $103 million. VEGI is an index ETF that seeks to replicate the performance of the MSCI ACWI Select Agriculture Producers Investable Market Index. The index is considered a good benchmark for agriculture investments.
The index and, consequently, the fund, focuses on farming, food and agricultural chemicals, farm and food-processing equipment, seeds, and food production. The top holding in the fund is Deere & Co. (DE). That farm- and heavy-equipment maker represents about 23% of VEGI’s assets.
The current dividend yield for VEGI is 2.4%, and the expense ratio comes in at 0.39%.
Invesco DB Agriculture Fund (DBA)
Another ETF for investors to consider is DBA. This fund is managed by Invesco Ltd. and has assets of close to $751 million. The fund tracks the DBIQ Diversified Agriculture Index and has an expense ratio of 0.85%. After the expense ratio is accounted for, investors shouldn’t see much tracking error from this fund.
DBA is not an equity fund. This unique ETF mirrors an index that’s designed to be a benchmark for agricultural commodities rather than stocks. Grains, cattle, pork, coffee, sugar and corn are all represented in the fund. This broad diversification makes DBA a good proxy for the overall agriculture market.
The sometimes volatile nature of commodities means that DBA is an aggressive ETF. The fund has great potential for appreciation but is not suitable for conservative investors. DBA’s forward dividend yield comes out to 3.7%.
Zoetis Inc. (ZTS)
ZTS is a very unique pharmaceutical company. This $86 billion New Jersey company develops, manufactures and distributes medicines, vaccines, supplements and medical treatments exclusively for animal health. Drugs for livestock like pigs, cattle and sheep are the company’s most important products, but they are prominent in equine health, pet health and poultry health as well.
Zoetis sells its products to veterinarians, ranchers, farmers, retail outlets and pet owners. In addition to drugs and medicines, it offers diagnostic equipment and health testing kits.
Sales for ZTS are strong and growing. Wall Street is looking for close to $9.2 billion in revenue from the company in 2024 and $9.8 billion for 2025. If those revenue numbers are achieved, it would mean a 6.5% growth rate.
ZTS is not an income stock, but it does have an annual forward dividend of $1.73 a share, which works out to a yield of 0.9%.
Tractor Supply Co. (TSCO)
Technically, TSCO is a specialty retailer in the consumer cyclical economic sector, but the company is nonetheless a true agriculture stock. This $32 billion rural retailer is well known and highly regarded by farmers and ranchers in the U.S.
Through its more than 2,300 big-box locations, the company offers merchandise, equipment, farm apparel and safety equipment, machinery, livestock feed, large and small tractors, tools, hardware, and almost anything else a farmer might need.
To put it simply, TSCO is the go-to retailer for the agriculture industry. Business has been brisk at TSCO and is expected to grow at a steady pace. EPS estimates come in at $10.28 on $14.9 billion in revenue for 2024 and $11.20 a share on $15.7 billion in revenue for 2025. That’s year-over-year earning growth of 9% on revenue growth of 5%.
TSCO features a forward dividend yield of 1.5%.
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7 Agriculture Stocks and ETFs to Buy originally appeared on usnews.com
Update 10/11/24: This story was previously published at an earlier date and has been updated with new information.
