WOOD: Can money grow on trees?

This ETF is profiting from the rising price of lumber.

By TheStockAdvisors Jun 26, 2013 10:46AM
By Doug Fabian, Making Money Alert

Conventional agricultural products include foods, fibers, fuels and raw materials, but there is an additional, unconventional segment of the industry that I want to bring to your attention: wood.

Now, you may not think of wood as an agricultural product. But wood involves the growth and harvesting of organic material, so it fits the definition. An ETF that tracks the lumber industry is the appropriately named iShares S&P Global Timber & Forestry Index (WOOD).
Since its start in June 2008, this non-diversified fund has sought investment results that, before fees and expenses, correspond to the price and yield performance of an index that tracks the 25 largest publicly traded companies engaged in the ownership, management and supply chains of forests and timberlands.

The holdings thereby may include forest products companies, timber REITs, paper product packaging companies or agricultural product companies.

Lumber, construction © fotog/Tetra images/Getty ImagesWhile WOOD has had a promising gain of 4.24% so far this year, the fund is capable of sizable annual gains such as in 2012, when WOOD soared 20.4%.

In addition, this ETF offers a modest dividend yield of 1.17%. And with current lumber prices skyrocketing -- lumber prices exceeded $450 per 1,000 board feet this past April -- expect WOOD to surge in tandem with those prices as the year progresses.

WOOD concentrates its assets in four sectors that comprise the components and products of the forestry industry: basic materials, 63.62%; consumer cyclical, 17.24; real estate, 12.49; and consumer defensive, 6.65%.

WOOD's top ten individually held companies make up 55.73% of the fund's total assets. The top five of these are: Rayonier (RYN), Weyerhaeuser (WY), Plum Creek Timber (PCL), West Fraser Timber (WFTBF) and MONDI (MNDI).

With the recent rebound in the housing industry (its biggest gain in seven years was last March), expect home prices to keep rising, causing timber's value to gain, too.

With timber companies profiting, WOOD's share price should climb as well due to that buoyed demand for lumber. And if you are invested in this ETF, you could take part in these possible profits. Knock on wood!

More from TheStockAdvisors.com




Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


There’s a problem getting this information right now. Please try again later.
There’s a problem getting this information right now. Please try again later.
Market index data delayed by 15 minutes

[BRIEFING.COM] The stock market punctuated July with a broad-based retreat that sent the S&P 500 lower by 2.0% with all ten sectors ending in the red. The benchmark index posted a monthly decline of 1.5%, while the Russell 2000 (-2.3%) underperformed to end the month lower by 6.1%.

To get a better feel for what led to today's retreat, we'd like to look back to Wednesday, when the market had ample reason to rally, but did not. Instead, it ended basically flat after a sloppy day of ... More


There’s a problem getting this information right now. Please try again later.
Sponsored by:



Quotes delayed at least 15 min