Author: Mr and Mrs DDU.
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Every six months Australia has a reporting season; nearly all the major companies on the Australian Stock Exchange report their full-year financials at the end of the tax/financial year (the financial year ends on the 30th June). So we get a busy few weeks of company reports to read in August (as well as the half-year result in 6 month’s time). We find it the most exciting time of year (for shares) because we get to see how our companies have actually performed. For 363 days of the year, the share price moves up and down whilst bearing no correlation to actual results, but on the 2 reporting dates the truth is revealed.
Since we bought Rural Farm Funds (ASX:RFF) (farmland landlord) they have done well. Let’s have a look at what they’ve achieved in their results.
Rural farm funds (ASX:RFF) full year results ending 30th June 2016
All of these figures are taken directly from Rural Farm Fund’s investor presentation and are comparing against the 2015 figures.
Earnings/Profit per share up 168%
Distributions/Dividend up 4%
Net Asset Value per share up 17%
Forecast 2017 distribution/dividend compared to 2016’s up 8%
Weighted average of leases remaining up 1.6 years to 13.8 years
Gearing increased by 1.6% to 36.7%
The huge jump in earnings looks good, but most of it was down to revaluations of their assets. But it counts as profit, so we will take that.
We’re pleased the average leases have increased; it gives a lot of security to RFF (and us) to know their tenants are long term. 13.8 years is a very long time.
Finally, having an 8% increase lined up for next year is great. REITs don’t normally have large increases in their distributions, so 8% is quite nice, particularly considering their current yield of 5.56%.
Our investment breakdown
If you’d like to see Rural Farm Fund’s dividends for the last few years, check out their ASX dividend & statistics page (which is one of the resources we use when checking out stocks).
Here is a graph showing the yield we’re receiving on our initial 334 shares of Rural Farm Funds:
We’re happy with that growth, it’s showing that we are earning extra income without extra effort or investment.
What other things did Rural Farm Funds report?
RFF continues to keep a lookout for further diversification such as their recent purchase of cattle farms in Queensland. Cattle farming isn’t risk free, Queensland is quite dry and susceptible to drought and there’s always a chance that people’s eating habits change. We like to aware of the risks or downsides to any business we invest in and so do RFF; they take precautionary measures against drought by holding a good amount of water credits.
Rural Farm Funds is a fairly unique stock; the investment idea behind farmland leasing continues to be attractive as only 5% of Australian farmland is leased (whereas in Europe and North America, the figure is much higher). RFF remains the only listed REIT on the ASX that’s taking this approach.
We like RFF for how simple of an investment idea it is. It has given us a good dividend yield, dividend growth and share price increase – which is what we’re after.
They also have a Dividend Re-Investment Plan discount of 1.5% which we have signed up to.
Owning more and more Australian land is very attractive to us. Being a farmer isn’t on our bucket list, but we’ll happily be RFF shareholders potentially forever.
Thanks for reading this article about our investing journey Down Under.
Onwards and upwards!