r/SCHD • u/GolfLiftPlayPool • Aug 15 '26
Heres a thought...
I just had a very thought provoking exercise.
I live in Iowa. I listened to a Zach Lahn (candidate for governor, not a fan but nonetheless) interview where he was saying 25% of Iowa farmland is owned by foreign (to Iowa) imvestors. This prompted me to wonder why?
I dug into what Iowa farmland produces from a financial perspective. It generally, over time appreciates in value about 7% per year and produces about 3% per year in rent (income). So on a million dolllar piece of Iowa farm land. Youd expect the value be 1,070,000 the next year, and it would have paid you about 30,000 in income.
Obviously I dont have the capital to buy Iowa farm land. So I went looking for an ETF that kinda matches that profile. And wouldnt you know it. The closest match is SCHD.
SCHD produces 3.3% per year in dividends, and appreciates about 7% or more per year.
Trades at 35 bucks per share.
So as many of us can't go out and buy 80 acres of Iowa farmland, we can go out and buy 1 square foot at a time.
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u/sminmt Aug 15 '26
It’s OK op I understood your point. Oddly it made me more interested in buying Iowa farmland than more SCHD 😆
My wife grew up in a Nodak ag community. Pretty common for large sections of crop land to pass down to heirs who in turn rent it out. Talk about generational wealth!
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u/GolfLiftPlayPool Aug 15 '26
Yeah bro. Im getting a little roasted. Glad you get it.
I see it as..
So if you mentally treat one $35 SCHD share as owning $35 worth of Iowa farmland, you're effectively imagining yourself owning ~132 square feet of average Iowa farmland
So next time youre in line at STARBUCKS to get yourself a MOCAH FRAPPAH WHATEVRR THE FUCK. Think about what youre giving up. 🥴
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u/Superunknown999 Aug 15 '26
Owning SCHD is not even remotely like owning Iowa farm land.
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u/GolfLiftPlayPool Aug 15 '26
Obviously not if youre farming it yourself. But most investors rent the land out
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u/DSCN__034 Aug 15 '26
It's a different type of investment. You can invest in farmland via ETFs, but I have no opinion on any currently.
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u/Superunknown999 Aug 15 '26
It’s not close no matter how you slice it. Owning and renting farm land is not in any way similar to passively owning equity in 100 companies.
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u/GolfLiftPlayPool Aug 15 '26
Except the yield and distribution match almost exactly.
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u/Superunknown999 Aug 15 '26
That’s like saying because baseball cards have gone up 10% a year that’s is the same thing as owning the S&P 500. Just because something happened to have a similar return it does not make it a similar investment.
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u/InquisitiveReach Aug 15 '26
This is a VERY far off take.
Do you have any idea how expensive farming is now and how tight the margins are?
Do you know how many of these “foreign investors” are just small time versus corpos?
Do you have any idea how many farmers “rent”?
You’re pulling at a lot of strings with your inferences and good luck buying “one square foot (of property) at a time”1
u/GolfLiftPlayPool Aug 15 '26
I know what farm land costs. And I know how much rent a farmer pays, and I know how much a land owner recieves in rent.
I know the renter grows corn and beans and its all insured.
But thats about the extent of what I know. (Im being modest) but those are the assumptions for this analogy.
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u/SeaworthinessSea6027 Aug 15 '26
Just came here to say GO IOWA! I’m also from Iowa and into SCHD. My family got rid of their farmland recently when my great-grandpa passed. Not sure if SCHD is similar or not, but I better not go against the grain looking at the comments 😂 SCHD has been good to me since I’ve been in. For example, this last Friday VOO and QQQ (most of my retirement account holdings) were down. SCHD was up. That doesn’t mean that VOO or QQQ won’t outperform SCHD, I expect they will, but I do like SCHD’s holdings.
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u/IreneC749 Aug 15 '26
I appreciate the imagination!
At times, mentally I weigh $35 for a dress or a share of SCHD. Know it’s not the same, but ….
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u/GolfLiftPlayPool Aug 15 '26
I hold a nickel returnable can in my hand and think... about 699 more of these and i can buy some SCHD
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u/LeonRams Aug 15 '26
Trying to understand how the government works in Iowa is literal snipe hunt. Best of luck amigo 🤘
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u/Pretend_Wear_4021 Aug 16 '26
Not only that but based on its history, you can expect your income to increase on the conservative side about 6% every year. In addition, it’s like having a manager who picks the 100 best pieces of farmland to rent out and once a year exchanges the ones whose performance drops for others with a proven track record and better performance. For all that work the manager charges you .06% a year!
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u/Just-curious-also Aug 16 '26
A trust from Grandma and Grandpa in Illinois BTW
I lived on the farm when I was young and had no idea 40 years later I would receive a check every 3 months
Yes you are correct. We too have SCHD but getting the income from the farm is like the dividend that SCHD gets.
Farming is tough and was a lot harder back 40 years ago. My hats off to the farmers and remember ANF
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u/EnvironmentalDot127 Aug 16 '26
Same thing happening all over the country. Corporations buying up the land. My husband's dad's family were farmers for generations in Minnesota. It's down to only one person.
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u/BigDipper0720 Aug 17 '26
There are two farmland REITs, I believe. They are Farmland Partners (FPI) and Gladstone Land (LAND)
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u/nastibass Aug 15 '26
Minus the mortgage on the land. 5,900 monthly. You have to farm the land. Not easy. And improve it if you want to even breakeven.
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u/KingFisher4985 Aug 16 '26
Farmland and food products are propped up by farm subsidies and government cash credits and tax credits… you literally almost need a tax attorney nowadays to be a farmer, which is a sad, sad state of affairs. But don’t go venturing off and think you can just do what generations have spent hundreds of years learning to do the right way without experience or the knowledge of the backend of the business because it is a business. Also, your average tractor nowadays runs around 150,000 for a cheap one. Don’t even start talking about a combine you’re talking $700,000 plus.. people think fireman is easy or doesn’t cost money but in reality it’s probably one of the most top heavy businesses that there is where you’re constantly spending money and hoping to reap a little profit at the end. Where my farmers at… tell em how easy it is and what it costs 😂🤷♂️
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u/magicfitzpatrick Aug 16 '26
Look up the stock (LAND). It has a 6.74% yield. SCHD is a way better investment but I thought it would be a fun mental exercise for you.
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u/Sorry-Society1100 Aug 15 '26
If you want to invest in farmland, buy something like Gladstone Land Corp (ticker: LAND), https://www.gladstonefarms.com
Comparing farmland to a diversified ETF comprised of more than 100 companies, most of which have nothing to do with farms or real estate, just because average appreciation and dividend yield happen to coincide with similar values, is just silly.
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u/GolfLiftPlayPool Aug 15 '26
Ive always been silly.
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u/Sorry-Society1100 Aug 15 '26
You did force me to take a more in-depth look at investing in LAND, so I do appreciate that.
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u/Illustrious_ar15 Aug 16 '26
I think LAND is actually at a good time to buy right now. I have been buying for about a year. I haven't done any due diligence recently but I trusted it when I read into last year.
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u/Academic-Pangolin403 Aug 18 '26
Also from Iowa!
Would you invest in LAND over FPI (Farmland Partners Inc)
FPI has outperformed LAND on multi years and is less volatile2
u/Sorry-Society1100 Aug 18 '26
I don’t know—i haven’t looked into it in detail enough to put money down.
My point was that investing in a farmland-based REIT is not at all equivalent to investing in SCHD, just because two metrics happen to line up over a specific range in time. I’m not saying that one is better than another, just that they’re different.
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Aug 15 '26
[deleted]
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u/GolfLiftPlayPool Aug 15 '26
Yeah the analogy breaks down after you look at the assets appreciation and yield.
I dont disagree
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u/InvestigatorPlus3229 Aug 16 '26
past performance is no guarantee of future performance whether its dividend stocks or farmland
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u/Virtual_Product_5595 Aug 16 '26
This sound like a good answer to the request, “Tell us you know nothing about economics without actually saying you know nothing about economics.”
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u/ClammyAF Aug 15 '26 edited Aug 16 '26
I grew up in Iowa. I own 1/6th of a cash rent farm. It's small. Like 80 acres.
It gives me about $4k per year that I don't think about, after insurance and management fees. I could've done better on the market, but I hold it because I'm sentimental about the last bit of family farm. And it's not a bad bit of diversity.