One of the benefits of investing in timberland is that it’s supposed to be boring. The nature of the asset class is that the slow growth of the forest is designed to create steady cash flows over the long term.
Trees grow, you harvest logs and then you plant new trees. It really is that simple. It’s one of the few commodities that gets better and more valuable with age. So when anything big hits the staid sector, it rocks the boat in a major way.
This time, that volatility could be spelled T-R-U-M-P.
Trump and his team have set their sights on the lumber industry in Canada. Through a series of tariffs, the Trump Administration is seeking to create fairness among producers of lumber in North America. Canada has maintained that their position is fair. Either way, the timber sector was shaken, and moreover, this could be the beginning of a much bigger piece of negotiations with regards to NAFTA.
For investors in the overall commodities sector, it’s time to pay attention to what happens in the sleepy industry, and ramifications for all natural resources could be significant.
Check out the top dividend-paying stocks in the lumber industry here.