Investors looking to diversify their portfolio should consider taking a position in small-cap stock %FarmerMac (NYSE: $AGM).
Officially known as the Federal Agricultural Mortgage Corp., the company provides loans such as mortgages for agricultural real estate and rural housing. Its loans are backed by the U.S. government.
The nickname Farmer Mac is a play on the names “Fannie Mae” and “Freddie Mac” that provide U.S. government-backed mortgages and mortgage-backed securities in the non-agriculture sector.
Farmer Mac was created by the U.S. government in 1988 at the height of a farm crisis in America, when family farms were going under at a record rate.
Based in Washington, D.C., Farmer Mac today works with the U.S. Department of Agriculture to provide mortgages and loans to farmers and agriculture companies across America.
That the loans are backed by Uncle Sam provides Farmer Mac with a degree of protection and insulation not found among other lenders.
In addition to the security it offers, investors will also like the steady returns of Farmer Mac’s stock, which has gained 24% in the past 12 months and 160% in the last five years.
Farmer Mac also offers a chunky quarterly dividend payment of $1.40 U.S. per share, giving it a strong yield of 2.65%.
And the stock currently trades at a comparatively low price-to-earnings (P/E) ratio of 13 times future earnings estimates.
Farmer Mac remains a small-cap stock with a market capitalization of only $2.22 billion U.S.
Currently trading at $211.06 U.S. per share, the stock is about 3% below its 52-week high of $217.60 U.S.
For investors who have an interest or curiosity about agriculture, Farmer Mac’s stock is certainly an attractive option.