This was the number of people on this planet as of early March,
according to the U.S. Census Bureau.
By the time you read this number, however, itwill be completely
out of date. Hundreds of people are added to the world population
every single minute.
By 2050, roughly 9 billion people will live on the planet, about
30% more than today.
And every member of this growing population needs food to
So, the big question for us today is: How do we, income
investors, take advantage of a growing demand for food?
We could buy food producers such as
Dean Foods (NYSE:
, but thatstock yields 0%. Meat processor
isn't much better, yielding a scant 1.7%.
I think the most compelling opportunity comes from a
little-known niche of masterlimited partnerships (MLPs) thatyield
more than 7%. These rare MLPs don't have anything to do with gas
and oil pipelines like most limited partnerships. Instead, they
produce and sell a good that's never been more important --
Population growth drives fertilizer demand. Every year, 75
million more people must be fed. At the same time, people in
emerging nations are also eating more meat, which increases demand
for grains. Today, roughly 35% of the world grain harvest is fed to
In the United States, nitrogen fertilizer -- the fertilizer of
choice for corn -- is in the sweetspot . Last year, U.S. farmers
dedicated the most acreage to corn since 1937, according to the
U.S. Department of Agriculture.
Drought is also playing a role in increasing demand. The recent
drought in the United States was the worst since 1956. Its effect
on U.S. fertilizer demand this year is generally seen as
positive.Analysts note that corn prices are extremely high and
expected to remain elevated through 2013, thanks to the drought. As
a result, fertilizer use will be high.
Not all analysts are optimistic. Some argue that because a
significant number of corn farmers earned lower income in 2012 and
their fields are still parched, farmers will restrict 2013 planting
and buy less fertilizer.
But nitrogen fertilizer companies themselves -- such as
Rentech Nitrogen Partners (NYSE:
-- arebullish . Rentech'sCEO says he "expects the drought to have a
favorable impact on nitrogen prices and demand..."
Risks to Consider:
One more note for when you're looking into MLPs like Rentech
Nitrogen Partners... Because these partnerships can throw off
unrelated business taxable income , which is taxable even in a
tax-sheltered account, the units are best held outside a
Action to Take -- >
Thepartnership 's location in Illinois, the heart of corn
country, also provides a key strategic advantage. Trucks canload
directly at the Rentechfacility and apply the fertilizer at the
critical time in the growing cycle. Combine that with a solid yield
of 7.3%, and you start to understand why theshares have soared --
doubling since first trading in November 2011.
In the long term, the partnership is poised to benefit from
increasing demand for nitrogen fertilizer. And income investors
looking toprofit from global population growth should give the
shares serious consideration.
-- Carla Pasternak
P.S. -- Stocks like Rentech are perfect for investors who are
near or at retirement age and are seeking a second income. We call
these "Retirement Savings Stocks"... they can hand you a "second
income" as much as 14 times what you can get with CDs, seven times
higher than bonds, and as much as three times higher than
brand-name Dow stocks. To learn more about them, go here.
Carla Pasternak does not personally hold positions in any
securities mentioned in this article. StreetAuthority LLC does not
hold positions in any securities mentioned in this article.
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