Agro boosts GDP and pays good dividends – 06/04/2023 – Marcos de Vasconcellos

If you haven’t seen it, I’ll tell you now: the GDP (Gross Domestic Product) for the first quarter of the year was well above expectations by the analysts on duty. While the group of banks and brokerages projected a growth of 1.3% in the period, reality brought an increase of 1.9%. Percentage wise, it was a positive surprise (or forecast error) of 46%.

The big leap came from national agriculture. The growth of agro in the three months was 21.6%. The biggest quarterly increase in the sector since 1996. The explanation comes mainly from soy, with its record harvest, a rise in cattle and chicken slaughter, as well as an increase in corn production.

Now it’s over? None of that. According to the CNA (Confederation of Agriculture and Livestock), the expectation for this year is a record harvest. The super harvest of corn and soy helps to reduce the costs of animal protein production (beef, pork and poultry), explains the entity.

It is essential that any progress in the area be accompanied by clear policies of social and environmental responsibility. An essential sector for our economy cannot continue being news in the world due to the astronomical numbers related to deforestation.

The good surprise with the GDP, released on Thursday (1st), together with a good mood in the international markets, animated the negotiations on the Stock Exchange on Thursday and Friday (2nd), leading the Ibovespa to recover the falls suffered from Monday to Wednesday, closing the sixth consecutive week of increase.

The stock with the highest appreciation on Friday came precisely from agro: Cosan, a sugarcane giant, a producer, mainly, of sugar and ethanol. Its shares (CSAN3) jumped over 7% on the day.

At the end of April, Cosan approved the payment of R$800 million in dividends to its shareholders. Which came to around R$0.43 per share. It is a good premium, considering that the stock was being traded at around R$14.

The number draws attention, but there is another type of paper traded on the market, directly linked to agribusiness, which has paid good dividends for its investors: the so-called Fiagro (Investment Fund for Agroindustrial Productive Chains).

Launched at the end of 2021, this type of fund invests the shareholders’ money in agribusiness investment assets, whether rural real estate or activities related to the sector’s production.

Today, Brazil already has R$ 12.6 billion invested in Fiagros, according to the most recent data from Anbima (Brazilian Association of Financial and Capital Market Entities). There are already R$ 2 billion more than at the end of last year.

What has attracted investors to this type of investment, in addition to the confidence that the sector will remain in excellent business for a long time, is its ability to pay good dividends.

As the government wants to encourage you to use your money to finance the expansion of agribusiness in Brazil, the dividends paid by Fiagros are exempt from Income Tax – as in the case of FIIs (Real Estate Funds).

There lies the opportunity for those seeking diversification and the so-called passive income. When comparing the ten Fiagros and the ten FIIs that paid the most dividends in May, according to a survey by the Órama brokerage and by the company Economatica, we see that the agro group distributed more money to their shareholders.

While the dividend yield (amount paid in dividends in relation to the price of the fund’s share) of the FIIs at the top of the list was, on average, 1.52% (reaching 1.78%, for the first in the ranking), the of Fiagros was 1.54% (reaching 1.9%).

As Friagro’s options are still few compared to real estate funds, it is even easier to choose. The main point is to understand what kind of business your money will be used for and to know who will manage these investments through the fund.

Seeing a commitment to adapt production to the best environmental and social practices gives a good clue as to whether or not it is a project that aims at the long term (for itself and for the planet).

Since Brazil continues, unfortunately, with an economy based on exporting raw materials and importing value-added goods –as you must have learned at school–, the wave surfed by the Fiagros has everything to remain in the interest of investors.

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