WOOD: Can money grow on trees?
This ETF is profiting from the rising price of lumber.
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.
While 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
VIDEO ON MSN MONEY
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.
[BRIEFING.COM] The stock market ended the Wednesday session on a mixed note. The tech-heavy Nasdaq displayed relative strength, climbing 0.4%, while the S&P 500 added 0.2% with five sectors settling in the green. For its part, the Dow Jones Industrial Average (-0.2%) spent the entire session below its flat line.
Equities started the midweek affair on a rather unassuming note in the absence of market-moving news or economic releases. With those pieces missing from the equation, ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'