Shareholding Review: Rural Farm Funds (ASX:RFF) 2016 Results

By | September 12, 2016

shareholding-review-rural-farm-funds-2016-results-dividends-down-under-blogAuthor: Mr and Mrs DDU.

Disclaimer: Stocks mentioned on this blog are for general entertainment/documentation purposes only, following our own investment journey and decisions.Nothing in this article should be considered investment advice nor is intended to be investment advice. Please click here to continue reading our disclaimer. By viewing any page on this blog you are agreeing to the linked terms & conditions.

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%

 

Initial thoughts

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:

rural-farm-funds-asx-rff-dividends-down-under-yield-on-cost

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.

 

Final thoughts

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!

14 thoughts on “Shareholding Review: Rural Farm Funds (ASX:RFF) 2016 Results

  1. Graham @ Reverse The Crush

    I like these kind of posts because they almost force you to analyze the company. Writing it down and publishing it online makes you do a more detailed job at analyzing. You have to make sure the information is correct.
    That said, the results look great. The dividend yield is growing nicely! Keep it up 🙂

    1. Dividends Down Under Post author

      You’re right Graham, we’re putting the results out for everyone to see. Certainly makes us question the company if we know hundreds of people are going to be judging our choices.

      We’re happy with the increases that RFF have given us so far.

      Mr DDU

  2. ADI

    Love owning more productive Australian Land as an investment thesis. Great idea, particularly given growing food needs in Asia. In particular, probably a better idea to own the land and rent it than to try to work it!

    Good to see that the investment is delivering for you guys. Congrats!

  3. Mrs. ETT

    How do you feel about the gearing? That seems to be pretty massive increase (or was it actually super low to begin with?) Would that be related to the purchase of the cattle farms?

    1. Dividends Down Under Post author

      A 1.6% increase isn’t much of an increase, but yes the increase was related to the cattle farms as well as a couple of other things they did throughout the year 🙂

      Mr DDU

      1. Mrs. ETT

        Ah, sorry, I was reading it incorrectly. Clearly I should get me to bed! Yes, you’re right, it’s not that big after all. Thanks!

  4. Divi Cents

    Land is forever. Great purchase and I hope it keeps moving up!

    I don’t know anything about farms except we will need them for a long time.

  5. Latoya @ Femme Frugality

    I learned something new! I had no idea that you could invest into rural farmland. I’m not sure how that works in the U.S. but it’s worth looking into to see how it goes! Thanks for sharing!

    1. Dividends Down Under Post author

      Glad we could teach you something new Latoya 🙂 I know it’s possible as a couple of our dividend investing blogger friends have that. They’re just like any other company you can buy on the stock exchange.

      Mr DDU

Comments are closed.