Image Source: Unsplash

With a yield of 2.8%, Federal Agricultural Mortgage Corp. (AGM) — or Farmer Mac – is driven by its mission to increase the accessibility of financing for American agriculture and rural infrastructure, highlights Tim Plaehn, editor of Monthly Dividend Multiplier.

As a secondary market for the nation’s agricultural and rural infrastructure credit, the company provides financial solutions to a broad spectrum of customers supporting rural America, including agricultural lenders, agribusinesses, and rural electric cooperatives. It’s also uniquely positioned to facilitate competitive access to financing that fuels growth, innovation, and prosperity in America’s rural and agricultural communities.

Federal Agricultural Mortgage Corp. (AGM) Chart

Backed by the US government, the company can borrow at a low cost of debt and deploy cash into agricultural loans. We also have to consider that farm lending is only set to increase.

In 2024, for example, the volume of farm operating loans increased for the fourth consecutive quarter. Fueling even more excitement, “US farmers retained their post-election optimistic outlook at the start of the new year, according to the January Purdue University/CME Group Ag Economy Barometer,” as noted by AgWeb.com.

In its most recent quarter, results were a bit light. EPS of $4.10 missed by a penny. Revenue of $91.5 million, down 5.7% year-over-year, missed by $630,000.

Still, according to President and CEO Brad Nordholm: “Farmer Mac delivered another solid quarter, demonstrating yet again the benefits of our successful efforts to continue to diversify our revenue streams, taking advantage of our strong capital base and uninterrupted access to low-cost capital.”

It also continues to maintain its strong capital position with total core capital of $1.5 billion, which exceeds requirements by 66%. We also have to consider that the Trump Administration could endorse more payments to American farms, which would call for more equipment upgrades and better financing.

My recommended action would be to consider buying shares of Federal Agricultural Mortgage Corp.

About the Author

Tim Plaehn is the lead research analyst for income and dividend investing at Investors Alley, a subsidiary of Magnifi Communities. He is the editor of The Dividend Hunter, Weekly Income Accelerator, and Monthly Dividend Multiplier. Mr. Plaehn was formerly in the US Air Force, serving as an F-16 fighter pilot and instructor. Several times a year he offers live training courses on income investing, covered call trading, and portfolio management.

More By This Author: