Billionaire Bill Gates made his fortune in tech, but he's now betting big on something completely different: farmland. Last week, Gates secured legal approval to buy 2,100 acres of farmland from north-eastern North Dakota potato farmer Campbell Farms.
Of course, this isn't the first time Gates has invested in the asset class. After accumulating nearly 270,000 acres of farmland in dozens of states, Gates is already America's largest private farm owner.
Gates' purchase of farmland in North Dakota initially raised concerns because of Depression-era laws that bar companies and limited liability companies from owning farmland in the area.
North Dakota Agriculture Commissioner Doug Goehring previously told KFYR-TV, a television station in Bismarck, North Dakota, that many people were unhappy with the news.
“I got a lot of attention about this from across the state, not even from the neighborhood. Those people are upset, but there are other people who are angry about this,” said Geohring.
However, anti-corporate farm laws allow individual trustees to own farmland if it is leased to farmers and that's exactly what Gates' company plans to do.
On Wednesday, the North Dakota Attorney General issued a letter saying the purchase complied with the law.
Recession Resistant Assets
You don't need an MBA to see the appeal of farmland. The market can go up or down, but no matter what, people still need to eat. That makes farmland intrinsically valuable. And it just so happens that Gates' best friend, Warren Buffett, also likes the asset.
In fact, Buffett purchased a 400-acre farm in Nebraska in 1986. "I don't need extraordinary knowledge or intelligence to conclude that the investment has no downsides and potentially substantial gains," Buffett wrote.
At Berkshire's annual shareholder meeting earlier this year, Buffett mentioned farmland again as one of the two assets he would buy instead of Bitcoin.
"If you say, for 1% interest on all farmland in the United States, pay our group $25 billion, I'll write you a check this afternoon," he said.
No Need to Be a Billionaire
While the very rich have acquired farmland, you don't have to be a billionaire to get your share of the act.
A publicly traded real estate investment trust that specializes in owning a farm allows you to do so with as little money as you want to spend. You also don't need to know how to work on a farm, just sit back, relax and enjoy the dividend checks rolling in.
Gladstone Land (LAND), for example, has 164 agricultural lands covering 113,000 hectares. It pays a monthly distribution of US$ 0.0454 per share, giving the stock an annual dividend yield of 2.5%.
Then there is Mitra Lahan Agriculture (FPI), a REIT with an agricultural land portfolio of 185,000 hectares and an annual dividend yield of 1.8%.
If you are looking for options outside of the stock market, there are investment services that will allow you to invest in farmland as well.
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