Things have changed in my hometown since I was a kid. Back then, most of the roads were surrounded by undeveloped farmland, mostly cotton fields that stretched to the horizon. Today, this land is filled with a Wal-Mart, Best Buy, Buffalo Wild Wings, and a hundred other stores and restaurants.

Such progress occurs almost daily, shrinking the amount of arable farmland. And once gone, it isn’t coming back. That didn’t matter to many a few months ago. But bare grocery store shelves during the onset of the Covid-19 pandemic served as a powerful reminder that farmers and ranchers are truly “essential”.

They are also a dying breed.

According to the latest census from the United States Department of Agriculture (USDA), about 40% of the country is considered farmland. Some 900 million acres in total. There are currently 2.03 million farms nationwide, each working an average of 443 acres.

That may sound like a lot. But the number has shrunk dramatically, falling by 12,800 just from the prior year. Back in the early 1980s, 2.5 million farms were growing some type of crop or livestock. That’s a loss of half a million farms in a single generation. Go back to World War II, and there were roughly 6 million farms across the country – three times what we have today.

A Century-Old Mega-Trend That’s Still In Play

This is the continuation of a longstanding trend towards urbanization. A century ago, 40% of the U.S. population lived on a farm. Today, it’s less than 1%.

So what is fueling this trend? Well, for some it could simply be the allure of moving to the big city. Others have no interest in following their parents and prefer to forge their own career paths. Tilling the soil and growing crops is often a back-breaking job with modest financial rewards. Droughts and pestilence can wipe out harvests; prices can be volatile. Keep in mind, the average age of the current farm owner is 60.

Many inherited farms are sold off parcel by parcel. Tracts of land that were once suited to grow soybeans or rice or vegetables are paved over to build new grocery stores or apartment complexes.

A comprehensive study from American Farmland Trust uncovered some illuminating (and frightening) statistics. Between 1992 and 2012, the U.S. lost an estimated 31 million acres of farmland. For perspective, that’s a landmass equivalent to the state of Mississippi.

In other words, we are losing 4,200 acres of farmland per day. The study found that fruit and nut-bearing orchards were particularly imperiled. But space for principal commodity crops is shrinking as well. Yet, there are always more mouths to feed – the global population is expanding by about 220,000 people per day.

In per-capita terms, the amount of arable farmland per person has fallen from 1.1 acres in 1960 to just 0.6 acres today.

Does that mean there is an investment angle here? You better believe it.

As an asset class, farmland produces a hefty recurring income stream – not from selling fruits, grains, and vegetables, but from rent. Most farmland is leased to operator tenants. But the underlying land has shown great appreciation potential as well.

The Easy Way To Get Into Farmland

According to the National Council of Real Estate Investment Fiduciaries (NCREIF), farmland values increased by an average annual rate of 14.7% between 2004 and 2018, outperforming the 9.1% of the S&P 500. Normally, those higher returns would involve greater risk. But not in this case. Standard deviation (a measure of volatility) of farmland values was less than half of the S&P, and not much more than the Barclay’s Aggregate Bond Index.

Farmland is also negatively correlated with equities, making it a great portfolio diversifier.

As my former Daily Paycheck readers can attest, Gladstone Land (Nasdaq: LAND) has been a steady income producer. The company owns 114 farms that span 89,000 acres. Most are suited to growing higher-value fruits and vegetables such as olives, grapes, blueberries, and pistachios.

Per acre, strawberry farms can be 80 times more profitable than corn – which means higher rent. And those rent collections are turned over to the stockholders. Since the IPO in 2013, Gladstone has made 81 consecutive monthly dividends – increasing the distribution 16 times over the past five years.

A Gladstone Land Strawberry Field In Oxnard, California

_{Source: Gladstone Land}

Action To Take

I think LAND would make a fine addition to almost any portfolio. If there is one certainty, it’s that everyone has to eat. And with the market selloff pushing this normally stable stock to $13, the yield is now above 4%.

But that’s just a prelude to my most recent recommendation over at High-Yield Investing. After all, Gladstone didn’t expand its portfolio from coast-to-coast without a little financial help.

Where did it get the cash? Well, a good chunk of it came from a specialized lender.

The business of financing farmers and ranchers is an important job. So important that my most recent pick has been sponsored by Uncle Sam, making it a quasi-government entity. But you won’t find any Washington bureaucrats in the executive boardroom – this organization is lean and profitable. And the untapped investment opportunities are vast. Agriculture contributes $990 billion to the U.S. economy annually. And the nation’s farmland (which is fragmented and 87% owned by individuals) has an estimated value of $2.4 trillion.

Put it all together, and you’ve got one of the fastest dividend growth trajectories I’ve ever seen. Payouts to shareholders have quintupled since 2005 — and the stock currently yields north of 5%. All while supporting an outfit that plays an instrumental role in putting food on America’s dinner table.

Unfortunately, I can’t share this recommendation with you today — out of fairness to my premium readers. But you should know that this could easily be one of our best long-term winners over at High-Yield Investing. So if you’re looking for a way to earn higher yields, then you should check us out. The market selloff has left yields of of 7%, 8%, even 10% on the table, just waiting to be scooped up. To learn more, go here.