Last year, timber accounted for about 49% of the company's $1.167 billion in sales.
Over the past 10 years, Plum Creek shares have an average annual return of 12%; while the S&P 500 is up an average of about 5.7%. The past four years have been less than stellar in terms of performance, with shares up less than 3% per year.
Rayonier Inc. (RYN - Get Report), which is the seventh largest owner of private timber land in the U.S., owns about 2.1 million acres, in 10 states and New Zealand, and leases an additional 600,000 acres.
About 200,000 acres, between Savannah, Ga., and Daytona Beach, Fla., are considered high value real estate.The company's primary business, Performance Fibers, which manufactures cellulose specialties used in packaging, plastics, yarn, cosmetics, food products, and cigarette filters to name a few, generated more than 68.5% of last year's $1.49 billion in revenue. Unlike Plum Creek, Rayonier generates just a fraction of its revenue from actual timber sales, 14.4% in 2011. Over the past 10 years, Rayoneir shares very quietly delivered an average annual return of 22%. Not bad for a company that many investors may not be familiar with. RYN data by YCharts
While it certainly does not seem like a very exciting sector, it could be another cog in the wheel of an inflation hedging strategy, if, like me, you believe that inflation is on the way. QE1, QE2, and now QE3; is there a QE 4 in our future? At the time of publication the author held no positions in any of the stocks mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.