Forests Are a Treasure. But Are They Good Investments?
Excerpt:
Trees don’t watch the stock market. Forests keep growing — and potentially increasing their value — even when inflation surges or the market swoons.
Big investors, like university endowments and insurance companies, have long allocated money to timberland in places like Oregon’s fir-and-spruce forests, Georgia’s pine plantations and Appalachia’s hardwood groves.
Until a few years ago, retail investors were mostly shut out of this market. The deals were too big, involving thousands of acres and tens of millions of dollars. ...
Owning shares of timber R.E.I.T.s is a more direct, if riskier, way to wager on the woods. These companies own forests across the United States.
Weyerhaeuser’s roughly 13 million acres approximate the combined area of New Hampshire and Vermont. Weyerhaeuser and Rayonier also have land abroad, the former operating in Uruguay and the latter in New Zealand. Potlatch owns only domestic timberlands.
Daniel P. Rohr, an analyst Morningstar, called the R.E.I.T.s a “pretty good substitute” for timberland ownership “because the assets are the same.” In both cases, cash flows from the forest, either through the harvest of logs or the sale of land. He cautioned that whenever people buy shares in a single R.E.I.T. or any individual stock, they’re taking on company-specific investment risks, like potential bankruptcy. “If I’m owning a timberland R.E.I.T., it’s because I’m bullish on U.S. housing, not because I want to add diversification to my portfolio,” Mr. Rohr said.
Comment: We have some
WY - like the dividend! Image snap from
Weyerhaeuser homepage, Also mentioned in the article the
Timber ETF WOOD and
PCH
