How to double your money from a listed property trust

Richard Hemming

Many investors have made a lot of money from Listed Property Trusts in the wake of the financial crisis. After all, you’ve had the combination of a sector in recovery and persistent low interest rates. The LPT index has gone from trading at a 20% discount to their net tangible assets during the GFC to trading at a 10% premium today.

Rural Funds (RFF): More than doubled
But among these stocks I doubt that there has been a stock that has more than doubled investors’ money in the past two years. We recommended Rural Funds (RFF) back in August 2015 at $1.09 a unit. Fast forward to today and the units trade at $2.13 and it has delivered 23 cents worth of dividends.

The group invests in land in South-East Australia and is intensively used for almonds, wine grapes, beef and chickens. Demand for the produce is climbing, alongside increasing population and wealth in Asia.

Under the Radar's Dividend Portfolio
We deliver the second part of our new Dividend Portfolio, which has been extremely popular. When we look at dividends in Small Caps, we are not looking for “yield plays” or “bond proxies”. We are looking for stocks like Rural Funds, which is covered in tomorrow’s report. Stocks which can produce exceptional growth plus a dividend.

So why has RFF grown? We go through a number of reasons in tomorrow’s report, but one that has proven to be the case is the early view that we took on the business of agriculture. We look at this as similar to one people might be more familiar with: your local coffee shop. When a coffee shop’s profits go up, so does its rent and hence the value of the land as its yield improves.

On the land, when productivity climbs, the increased profits quickly get eroded by a resulting fall in commodity prices as other farmers use the same technology. While commodity prices have declined in real terms in the past century due to catalysts such as Henry Ford's tractor, synthetic fertilisers in the 1950s and today genetically modified plants, land values have gone up an average of 4.5% a year.

RFF has been a big beneficiary of this. We believe it will continue to be, but obviously in a low interest rate environment this benefit is accentuated.

Subscribers will find out tomorrow whether RFF forms part of our Small Cap Dividend Portfolio.

Our Performance: 25% annualised return
We’ve done two dividend portfolios, one in January 2016 and another a year later. Both have achieved annualised returns of over 25% and both have more than doubled what the market has done. The first one has returned just over 60%, while the second 18% in nine months.

What also comes through is that the performance of the first portfolio done in January 2016 has accelerated in the second year. This shows that investing on the basis of dividend strength can deliver outstanding capital gains for the long term.

Don't Miss out on these dividend stocks!

This is an issue that should not be missed.

Best wishes,

Richard Hemming.


About the Author

Richard Hemming

Richard Hemming ( is an independent analyst who edits, which provides investment opportunities in Small Caps that you won’t get anywhere else.

Under the Radar Report is licensed to give general financial advice only (AFSL: 409518). The author does not own shares in any of the stocks mentioned.

Under the Radar Report is licensed to give general financial advice only (ASFL: 409518). The author does not own shares in any of the stocks mentioned.

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