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The agriculture industry can offer investors exposure to a necessary and growing portion of the market underrepresented in many stock market recommendations.
To determine the top agriculture stocks for 2023, we looked at factors such as earnings per share yield, market cap, average year-over-year growth, average agricultural commodity prices and the agricultural products offered by the relevant companies.
Best Agricultural Stocks
- Archer-Daniels Midland – Best agriculture stock
- Intrepid Potash, Inc. – Best fertilizer stock
- Caterpillar, Inc. – Best farming equipment stock
- John Deere & Co. – Best farming stock
- Bunge Limited – Best wheat stock
- AppHarvest, Inc. – Best vertical farming stock
- Mosaic, Co – Best potash stock
- Corteva Agriscience – Best pesticide stock
- ScottsMiracle-Gro – Best gardening stock
- Gladstone Land Corporation – Best farmland REIT
Archer-Daniels Midland (ADM)
Archer-Danials-Midland, known as the largest publicly traded company, produces farmland products, including cereal grains, oilseeds, and related storage and transportation services.
The company reported an average revenue and earnings per share increase over the previous year, making it a great addition to any portfolio looking to pick up a blue-chip agricultural stock.
Intrepid Potash, Inc. (IPI)
The company offers a great opportunity for investors looking for growth potential due to their third-quarter earnings report from 2022. It announced a net income increase of triple the previous year-over-year growth, mostly due to an increase in sales by roughly one quarter.
Caterpillar, Inc. (CAT)
As a leading manufacturer of construction and mining equipment, Caterpillar may not seem like an agricultural investment. However, it often receives contracts and provides equipment to developing agriculture sites, making it a way to gain exposure to the growth side of agriculture.
Caterpillar posted a 2021 sales report of $51 billion and has been operating for almost 100 years, making it also a worthwhile company to hold for the long term.
John Deere & Co. (DE)
John Deere is another big manufacturer of agriculture equipment, specifically focusing on lawn and farming gear. In addition to its growing market cap, the company offers sustainability investors an interesting opportunity.
The company recently started its sustainability-linked bond framework, covering initiatives to make farming more sustainable, including more efficient nitrogen use, waste reduction and reduced freshwater consumption while maintaining high crop yields through new technology.
Bunge Limited (BG)
Bunge offers services in agricultural transportation and oilseed refinement and has its headquarters in St. Louis, Missouri. The company maintains relations with several innovators in the agricultural space, offerings roughly 200 years of experience to these developers.
Bunge has doubled its stock price over the last five years, even with the recent loss, so given its history and involvement with innovations, the company looks to be another long-term investment with low risk.
AppHarvest, Inc. (APPH)
AppHarvest is an Appalachia-based company working on the development of indoor farming technology that allows farmers to improve crop yields while reducing water consumption and preventing agricultural runoff into local water sources.
The stock only has five years of history, making the company a risk compared to long-standing companies. However, if AppHarvest’s innovations take off, it could see high stock price growth over the next 10 years.
Mosaic, Co (MOS)
Mosaic is another large corporation focusing on fertilizers. The company is a global producer of potash and concentrated phosphate fertilizers for agricultural operations.
In 2022, Mosaic announced that its quarterly dividend yield would increase to $0.15 per share starting in December of that year.
Dividend growth offers investors a way to increase the rate at which they reinvest into a company or their overall portfolio, making Mosaic stock a great choice for a dividend reinvestment plan.
Corteva Agriscience (CTVA)
Corteva is an agriscience company dedicated to improving crop yield and protection through innovations.
What makes Corteva interesting is its overt focus on shareholder experience. The company offers a reliable, though low, dividend yield, making it attractive for those looking for a reliable dividend payout each quarter for a reinvestment plan.
As one of the largest producers of lawn, gardening and associated growing products, Scotts Miracle-Gro continues to be a solid investment based on market cap alone.
The company recently based some downward trends in sales in key divisions, leading to an overall decrease in full-year revenue and stock price from the previous year.
However, Scotts Miracle-Gro already has plans to restore lost revenue in these divisions while continuing to push growth in developing sectors, making the stock an enticing buy for short-term appreciation.
Gladstone Land Corporation (LAND)
The Gladstone Land Corporation invests and leases real estate properties in the commercial and industrial sectors, including for agricultural projects. It generates revenue from the interest paid on land mortgages and leases and land sales through prospective acquisition.
While Gladstone doesn’t offer much to the direct production of agricultural goods, it allows real estate investors to gain exposure to the agricultural sector through its portfolio.
The company also offers an average 3% dividend yield, higher than most agricultural stocks.
5 Agriculture Stocks Honorable Mentions
We found some other stocks that could be a worthy addition to an investor’s agriculture portfolio:
- Nutrien Ltd. (NTR):This Canadian company produces crop nutrients for various agricultural sectors and maintains roughly 1,700 retail locations, making it a low-risk investment for the short term.
- ICL Group Ltd. (ICL):This producer of fertilizers and other industrial products operates out of Israel and offers potential growth as the Dead Sea region experiences record production rates.
- Calavo Growers (CVGW): For investors that want to buy into the direct growth of crops, this company has ties to many global markets and farms.
- FMC Corp. (FMC): This agricultural science company deals in crop protection and health, making it a worthwhile buy for those interested in the crossover of agriculture and technology.
- China Green Agriculture (CGA): For exposure to the Chinese market, this New Jersey-based company maintains most of its operations through farmland in rural China.
What Are Agriculture Stocks?
Agricultural stocks relate to agribusiness ventures of all kinds. The most common types of stocks relate to:
- Farming: The growth, maintenance, and harvest of produce for local markets or the global economy.
- Raising livestock: The rearing of various animals for food, animals’ products and other animal derivatives for the local and global market.
Benefits of Agricultural Stocks
Agriculture businesses have benefits to investors, some of which are unique to the sector. These include:
- Demand for food: With the growing population of the globe, the demand for food will continue to go up.
- Passive income: Many agriculture businesses offer dividends, turning their stocks into a source of passive income.
- Dividend income: Dividend income can fund daily expenses or act as a reinvestment tool.
- Hedge against inflation: Commodity prices tend to increase over time with inflation, increasing the evaluation price of agriculture stocks.
- Portfolio diversification: There aren’t may agriculture stocks compared to high-growth sectors such as technology, making it a great addition to a well-rounded portfolio.
Risks of Agricultural Stocks
There are unique risks associated with the agricultural sector that investors should know about.
Some of those risks include:
- Production risk: Poor weather, plant or animal diseases, and other hiccups in production can disrupt agricultural markets.
- Market risk: Agricultural markets have decent volatility due to the above production risks, meaning companies involved in other downtrends can see a negative impact on their earnings, e.g., the current conflict between Russia and Ukraine.
- Financial risk: Agricultural businesses often use debt to fund operations, making high-margin plays and increased interest rates problems for this sector.
- Regulatory risk: Any changes to taxes and subsidies can change agriculture earnings for better or worse.
How to Buy Agriculture Stocks
To start investing in agricultural stocks, follow these steps:
- Create a brokerage account with your brokerage of choice, ensuring they offer the stocks you want to buy first.
- Provide the information necessary to confirm your identity and establish the account.
- Transfer money into the account via a bank transfer or a payment processor.
- Submit an order for how much stock you want to buy.
Agricultural stocks offer investors a new sector to invest in that can experience good growth through the increasing demand for its products.
While market and weather trends can affect these stocks more than others, most well-established companies have plans and cash reserves to stave off these short-term bumps.
Check out the stocks we mentioned above to see if any of them fit into your investing strategy. Learning how each company operates and how agricultural stocks can affect your portfolio can give you a lower risk chance and better returns in the long run.
Agriculture Stocks FAQs
Here are the answers to some common questions about agricultural stocks:
Is agriculture a good investment?
Agriculture is a great investment thanks to the increasing demand for food and agricultural products and the reliable average dividends and growth these companies see each year.
What is the difference between agriculture and farming stocks?
Agriculture stocks refer to any stock for a company creating products needed for growing food or raising livestock. Farming stocks come from companies focused solely on food production.
What is the typical yield for agricultural stocks?
Most agricultural stocks offer a dividend yield between 1% and 3%. Most value in agricultural stocks comes from their growth potential over their dividend payout.