Investors who are looking to gain exposure to agriculture while generating income face a challenge. As shown below, none of the leading agriculture plays pay much of a dividend.
- Potash Corp (POT): 1.28%
- Monsanto (MON): 1.43%
- CF Industries (CF): 0.82%
- Deere & Co (DE): 2.37%
- Mosaic (MOS): 0.91%
- Agrium (AGU): 1.11%
- Andersons (ANDE): 1.51%
However, one place where investors can gain exposure to agriculture and generate income is in fertilizer limited partnerships.
Terra Nitrogen Company LP (TNH)
TNH produces nitrogen fertilizer products. The company produces both anhydrous ammonia and urea ammonium nitrate solutions. CF Industries owns 75.3% of the company and has significant control over the company. Currently, TNH is yielding 7.94%.
Rentech Nitrogen Partners LP (RNF)
RNF, like TNH, produces both anhydrous ammonia and urea ammonium nitrate solutions. RNF is relatively new as it was spun out of Rentech Inc (RTK) in late 2011. Rentech Inc controls 61% of RNF. RNF currently yields 8.06%.
CVR Partners LP (UAN)
Like both RNF and TNH, UAN produces both anhydrous ammonia and urea ammonium nitrate solutions. UAN is relatively new as it was spun out of CVR Energy (CVI) in 2011. CVR Energy is the general partner of UAN. It should be noted that Carl Ichan has a controlling stake in CVR Energy. UAN currently yields 8.92%.
Conclusion
Adding a fertilizer limited partnership to a portfolio is a way to both gain exposure to agriculture and generate income. This is a combination that does not exist in the traditional agriculture plays.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
