The ASX has a number of interesting companies to choose from different sectors, but there's also a variety of property businesses. Most of these property businesses are real estate investment trusts (REITs).
One of my favourite REITs is Rural Funds Group (ASX: RFF). It's currently the only REIT that purely invests in agricultural property and leases those farms out. Here are a few reasons why I like it:
Diverse farms types
Rural Funds has a diverse group of farms, which can only help the business to mitigate risk and offer more potential targets to acquire.
Current farm types include almonds, macadamias, cotton, vineyards, poultry and cattle. Most of these commodities have long-term potential so this should help grow the value of the farm and the rent it can charge.
Long-term growth
Farms have been useful assets for hundreds, if not thousands, of years. We will always need to eat food and there is nothing on the horizon which could make a farm less useful.
In-fact, farms should continue to become far more valuable with the growth of the national population and global population. All of these people need to eat, Australia has a lot of farmland which could be utilised and leased out.
Pleasing income
Rural Funds has a general target of growing its distribution by 4% each year, which management have already pencilled in for FY18.
The business is able to do this because it has rental indexation increases built into all of its contracts. Most of them are either a fixed rate increase or a CPI-inflation increase.
Rural Funds currently has a trailing distribution yield of 4.35%.
Foolish takeaway
Rural Funds is one of the best options for income hunters in my opinion, which is why I'll be looking to add more to my portfolio, at the right price. It's currently trading at far beyond its net tangible assets per unit, so until it's a lot closer to that value, I won't be buying any more.
