Grow your wealth on trees

Likely very few of you or even none have ever thought about timber stocks as part of your investment strategy. Indeed very few people know about timer lands and relevant companies. Actually this is another world which can be very profitable if you are patient enough. You literally can grow your money and wealth on trees.

Trees do not care about economies or politics anywhere in the world. They simply grow up year after year. The use of timbers can reach almost any corner of the world, directly or indirectly. Therefore, timber stocks are usually not closely correlated to the stock markets. For example, during the great depression, the stock market plummeted 70% but timber was up over 200%.

If you like what I said and will be interested in some timber stocks, I think Plum Creek Timber Company (PCL) is worthy of your attention. PCL has about 8 million acres of timberland in the U.S and its core business is focused primarily on owning and managing timberland. Investing in PCL has also tax advantages since it is a Real Estate Investment Trust (REIT). As a REIT, PCL has to pass on 90% profits to its investors as dividends, which will be taxed as capital gain at 15% instead of as ordinary income that can be much higher if you have a high income. Currently PCL pays a 4.2% dividend, which is significantly higher than usual dividend yields from other companies.  PCL is 66% owned by mutual funds.

While PCL can be volatile in the short terms, over a long period of time it is very stable and is doing much better than the overall stock market. In the past decade in which the stock market has experienced 2 miserable crashes and has gone no where but stayed where it was 10 years ago (red line below), PCL has shot up 60% (capital gain) during the same period of time (blue line). And don't forget, it has also paid high dividends all along in addition to the capital gain. In other words, you would have been doing much better to simply let the trees grow your money.