Increasing prices for agricultural products do prove to be a boon for farmers, who will now earn large profits for each piece of grain and drop of milk produced. While it is unlikely for the average person to suddenly switch careers to become farmers in order to get a piece of the action, but as investors we also ride this wave by entering positions in agricultural related companies as a picks and shovels play.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

The rationale is that farmers will need the best seeds, fertilizers, animal feed and other agricultural inputs in hopes of producing the largest yields possible. Therefore, the company's that are selling products to the farmers should be in for a decent payday as well. However, there is a curious conundrum for many income-oriented investors when venturing into the agriculture sector. In most cases, it can be difficult to find a cost-effective way to increase exposure to agriculture stocks while also obtaining a satisfactory income stream through dividends since many companies reinvest rather than giving money back to shareholders. Although an investor should always hold a diversified portfolio to minimize company-specific risk, a selection of these stocks could offer a bit of the best of both worlds.


Agricultural Stocks To Know


Company

Market Capitalization
Dividend Yield

Monsanto Co.(NYSE:MON)
43.67B 1.50%
Cosan Ltd.
(NYSE:CZZ)
3.28B 2.4%
Deere & Company. (NYSE:DE) 31.79B 2.4%
Compass Minerals International(NYSE:CMP) 2.52B 2.70%
Terra Nitrogen Company(NYSE:TNH) 4.08B 7.2%
06/29/2012

Bottom Line
Food prices will likely continue to rise as our population grows and biofuel development gains popularity. As a result, the companies mentioned in the table above could be a good addition to any portfolio.

SEE: 3 Companies You Can't Live Without

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  2. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  3. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  4. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  5. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
  6. Stock Analysis

    Analyzing Sprint Corp's Return on Equity (ROE) (S)

    Learn about Sprint's return on equity. Find out why its ROE is negative and how asset turnover and financial leverage impact ROE relative to Sprint's peers.
  7. Stock Analysis

    Why Alphabet is the Best of the 'FANGs' for 2016

    Alphabet just impressed the street, but is it the best FANG stock?
  8. Investing News

    A 2016 Outlook: What January 2009 Can Teach Us

    January 2009 and January 2016 were similar from an investment standpoint, but from a forward-looking perspective, they were very different.
  9. Mutual Funds & ETFs

    3 Vanguard Equity Fund Underperformers

    Discover three funds from Vanguard Group that consistently underperform their indexes. Learn how consistent most Vanguard low-fee funds are at matching their indexes.
  10. Investing News

    Alphabet Earnings Beat Expectations (GOOGL, AAPL)

    Alphabet's earnings crush analysts' expectations; now bigger than Apple?
RELATED FAQS
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center