Unlocking Yield in 2025: Diversified Royalty Streams in Energy and Agriculture

The search for yield in 2025 has become a defining challenge for investors, as traditional fixed-income assets struggle to keep pace with inflation and geopolitical volatility. Yet, two sectors-energy and agriculture-offer compelling opportunities through undervalued yield-generating assets, particularly in the form of diversified royalty streams. These instruments, which provide exposure to cash flows from resource extraction, infrastructure, and farmland, are gaining traction as investors seek to balance risk and return in a fragmented market.

Energy: The Transition Fuels Royalty Opportunities

According to the Energy Markets In Focus Q3 2025 report, the sector is projected to invest $3.3 trillion in 2025, with $2.2 trillion allocated to clean technologies. This shift has created fertile ground for royalty and streaming companies, which offer leveraged exposure to critical minerals without the operational risks of traditional mining.

Electric Royalties, for instance, has positioned itself as a key player in the clean energy transition. The company holds a diversified portfolio of 73 royalties across nine clean energy metals, including lithium, copper, and zinc, with 35 assets expected to generate revenue in 2025. Its recent acquisition of a producing copper-gold mine in Chile underscores its strategy to capitalize on near-term cash flows while aligning with long-term demand trends. Similarly, lithium extraction from produced water in the Smackover formation-recently acquired by Exxon-highlights the sector's innovation in unlocking value from unconventional sources.

Beyond clean energy, traditional energy infrastructure remains undervalued. Shell plc (SHEL) and TotalEnergies SE (TTE) trade at 42.9% and 35.9% discounts to intrinsic value, respectively, despite robust free cash flow margins and diversified portfolios that include LNG and renewables. Midstream operators like Enterprise Products Partners L.P. (EPD), trading at a 43.4% discount, benefit from long-term contracts and essential infrastructure, making them attractive for income-focused investors.

Agriculture: Farmland as a Resilient Yield Generator

The OECD-FAO Agricultural Outlook 2025–2034 notes that rising urbanization and per capita incomes in low- and middle-income countries will drive demand for livestock and fish products, even as crop demand plateaus in advanced economies. This structural shift creates opportunities for agricultural royalty streams, particularly in farmland and crop-input companies.

Nutrien Ltd. (NTR) and CF Industries Holdings, Inc. (CF) exemplify this trend. Nutrien trades 9.3% below intrinsic value, supported by $1.68 billion in free cash flow, while CF is undervalued by 65.2% despite generating $1.79 billion in free cash flow. These companies benefit from the growing need for fertilizers to sustain food production in a warming climate. Meanwhile, farmland itself remains a compelling asset. Despite a rare -1.03% return for the NCREIF Farmland Index in 2024, the sector's historical average of ~10.2% annual returns since 1991 underscores its resilience.

Emerging royalty models in agriculture include crop-share agreements and operating partnerships, which stabilize cash flows even during periods of valuation volatility. For example, the USDA projects a $37.8 billion increase in inflation-adjusted U.S. net farm income in 2025, driven by stabilized input costs and improved crop receipts. This dynamic positions farmland as both a store of value and a yield generator.

Interconnected Trends: Energy Transition and Agricultural Resilience

The energy transition and agricultural markets are increasingly intertwined. Natural gas and LNG infrastructure, critical for grid resilience amid AI workloads, also support fertilizer production, which is vital for food security. Carbon capture and storage (CCS) initiatives in regions like the Gulf Coast further illustrate this overlap, generating royalty opportunities that span both sectors.

Investors are recognizing these synergies. The Energy Markets In Focus Q3 2025 report reveals that 74% of investors allocated over $100 million to energy transition assets in 2025, with 64% focusing on energy efficiency and 56% on renewables. Meanwhile, 94% of investors emphasized the importance of partnerships to navigate regulatory and operational risks-a strategy that aligns with royalty models, which inherently distribute risk across multiple assets.

Conclusion: A Strategic Case for Diversified Royalty Streams

The convergence of undervalued energy and agricultural assets with royalty and streaming models offers a unique opportunity for investors. These instruments provide exposure to rising commodity prices with minimal operational costs, while diversifying risk across sectors and geographies. As the energy transition accelerates and global food demand evolves, diversified royalty streams will likely play a pivotal role in generating sustainable yields.

For those willing to navigate the complexities of these markets, the rewards are clear: a portfolio that balances the urgency of the energy transition with the timeless demand for food.