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Date : 25/06/2024

Rural Funds Group (ASX: RFF) Is Your Best Choice That Pays Quarterly Dividend and Has 6% Yield

Rural Funds Group (ASX: RFF) provides a stable income stream to dividend seekers even in a volatile market. This real estate investment trust (REIT) specialising in agricultural assets is a compelling option investors can bet on.

The RFF stock has a current dividend yield of 6% and pays dividends quarterly. This REIT stock is popular among income-focused investors.

RFF: 1H FY24 Highlights

The Rural Funds Group share price closed Friday’s trading session up 0.98% at $2.07.

Rural Funds Group Shares News
  1. Property Revenue: Increased by 12.4% ($4.6m) to $42.0m due to rental income from macadamia developments.
  2. Earnings: Grew by 19.5% ($11.6m) to $71.0m, driven by property revenue and asset revaluations.
  3. Adjusted Net Asset Value (NAV): Rose by 4.8% ($0.14 per unit) to $3.07 per unit, mainly from asset revaluations.
  4. Adjusted Funds From Operations (AFFO): 4.0 cents per unit (cpu); forecasted to be higher in 2H24.
  5. FY24 Forecast: AFFO of 11.2 cpu and distributions of 11.73 cpu.
  6. Bank Debt Facility: Extension and limit increase completed, indicating strong financier support.
  7. Facility Headroom: $171.6m available for committed capital expenditure in FY24 and FY25 ($165.7m).

RFF: What is Rural Funds Group?

Rural Funds Group (ASX: RFF) is one of Australia’s most diversified agriculture REITs. The company owns various agricultural assets such as vineyards, cattle and cotton properties, almond orchards, water entitlements, and macadamia orchards.

The company has leased these assets to experienced operators under long-term agreements. These assets provide stable income streams for the company and have the potential for capital growth.

Farmlands are valuable assets and will remain useful whether in the past or the future. Due to their relevance, investors are highly attracted to their long-term stability. Additionally, the continuous increase in Australian and global populations is a substantial advantage for the business.

RFF: Dividend Investors Like Rural Funds

In January 2022, Rural Funds stock price reached its all-time high of $3.18, and since then, the stock has been consistent around a share price of $2.

Rural Funds’s distribution yield is 5.67% at the current share price, which is still higher than various dividend stocks listed on the ASX.

Regarding dividend-paying, Rural Funds is different because it pays dividends quarterly, unlike other ASX dividend stocks that pay dividends semi-annually. RFF stock could be a good choice for retirees who rely on a passive income to meet their living expenses.

Another quality of this company is that its portfolio is very diversified and spread across different agriculture sectors. This reduces the risk associated with any single commodity or market.

RFF is Trading below its book value

Following a recent decline in unit price, Rural Funds is now trading below its book value with a price-to-book (P/B) ratio of 0.73x based on its reported figures. This calculation includes its water entitlements at their book values. When adjusted to reflect the estimated market value of these assets, the company’s net asset value (NAV) is estimated at $3.07 per unit as of 31 December 2023, resulting in an even lower adjusted P/B ratio of 0.67x.

These appealing valuations have attracted the attention of some analysts. Our analysts, in particular, have highlighted the attractive valuation and high distribution yield as key reasons to favour Rural Funds.

Conclusion

In conclusion, Rural Funds Group (ASX: RFF) is an excellent choice for dividend-seeking investors, offering a stable 6% yield with quarterly payouts. The company’s diverse agricultural assets provide steady income and growth potential. Strong financial performance in the first half of FY24 and trading below book value enhance its investment appeal. For retirees and income-focused investors, RFF stands out for its stability, regular income, and resilience in the agricultural sector.

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