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Timberland properties are becoming a go-to investment for the wealthy, and regular investors are starting to catch on.
Timberland is giving investors a chance to earn steady returns, hedge against inflation and diversify their portfolios with a sustainable asset. “Forest investors are typically not looking for high risk and high return,” Campbell Global President Angela Davis told Forbes. They’re looking for yield, inflation protection, “environmental virtue” and something that doesn’t move with the stock market. The company, which was acquired by J.P. Morgan Asset Management in 2021, manages $10 billion in timberland.
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Davis oversees 1.4 million acres of timberland across the U.S., Australia and New Zealand. According to her, a properly managed forest can deliver around a 4.4% annual yield from harvested wood alone. Add long-term log price growth and carbon credit sales, and total returns can hit 7%.
“Let it grow. Sell a higher volume at a higher price later,” Davis told Forbes about her long-term approach to timber prices. Unlike public real estate investment trusts tied to mills, she can afford to be patient.
Even with all the natural obstacles like wildfires, pests, protected areas, and hungry bears, Davis says sustainable forestry still works. Her team of 75 foresters actively manages risk, cuts compromised trees, and builds firebreaks.
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Public investors don't have to buy land to get in. Shares of timberland REITs, like PotlatchDeltic Corp. (NASDAQ:PCH), Rayonier Inc. (NYSE:RYN) and Weyerhaeuser Co. (NYSE:WY) offer exposure without the hassle. These REITs pay dividends, and all are traded on major exchanges.
PotlatchDeltic had a 4.18% dividend yield, Rayonier offered a 4.56% yield, and Weyerhaeuser had returned 3.26% year to date.
Timber REITs are attractive for sustainability-minded investors because timber is a renewable resource, and many REITs follow sustainable forestry practices.
