John Deere, or, as it’s publicly traded, Deere & Co. (NYSE: DE), has been one of my favorite stocks for years. And it is an ideal long-term growth and income play for just about anyone but especially for retirement portfolios.
Deere is the worldwide leader in farming equipment. It’s perfectly positioned in the hottest spots in Asia and Latin America for huge future growth and is a solid dividend payer with a long history of dividend increases and stability.
But what makes this a perfect retirement play is the fact Deere is also one of the most predictable growth stories in the market. And its future is all green lights.
Because Deere’s growth is tied directly to food production worldwide, its growth follows the population growth of the world, and the resultant increase in food demand. Both, in case you don’t already know, are exploding.
The UN’s numbers for population growth and food production are nothing short of scary. Last year, the planet earth for the first time in recorded history reached the point where it couldn’t produce enough food to feed everyone on it.
Going forward, estimates guarantee many people will be hungry on a regular basis. In some parts of the world there are already people who are forced to choose days when they do not eat, not for dietary reasons, but because there is not enough food.
The developed and emerging parts of the world have already kicked their food production into high gear but it is still not enough. Deere is in exactly the right spot at the right time to capitalize on farm equipment spending that must occur if a large part of the world is to eat regularly.
Deere has taken its lumps over the past year or so with the slowdown in Asia, specifically in China, and the struggling U.S. and E.U. economies. But it is showing signs of positive movement in both its numbers and its stock price.
Its stock is well off its bottom but is still about 11% below its 52-week high. It sports a very cheap forward P/E of just 10.49. And its 2.4% dividend is reliable and respectable. It’s not one of the top payers. But I know of no other stock that has as a predictable, long-term upside as this one.
This is not a straight-up story. But it has decades, not years, decades, of solid growth to come.