Written by Daniel Da Costa at The Motley Fool Canada
As the market continues to sell off, and economists and analysts continue to see the risk of a recession next year increasing, there might be no better time to buy defensive stocks for your portfolio. You can find defensive stocks in almost any industry, but real estate is one of the best sectors you can find highly resilient real estate investment trusts (REITs) to buy now and protect your capital.
Many of these stocks have great management teams, high-quality assets and reliable tenants, which is why they’re so safe and reliable. In addition, you also want to make sure they have strong balance sheets to help weather the storm, as the economy’s growth slows rapidly.
Furthermore, the cash flow these stocks receive monthly is another reason why they’re so safe, in addition to making them excellent passive-income generators.
So, if you’re looking to add defensive stocks to your portfolio in the current market environment, here are two of the best REITs to buy now.
One of the best retail REITs to buy for safety and passive income
Plenty of REITs make for resilient investments that return attractive passive income, but one of the best defensive stocks to buy in the space has to be CT REIT (TSX:CRT.UN): the REIT that’s largely owned by Canadian Tire.
In addition to Canadian Tire owning CT REIT, Canadian Tire also accounts for about 90% of its revenue. So as long as Canadian Tire businesses are strong, and they’ve been firing on all cylinders in recent years, then CT REIT should remain highly robust.
In fact, throughout the pandemic, CT REIT was one of the most reliable stocks to own, not just among its retail REIT peers but among all the best REITs you can buy.
CT REIT was so robust that throughout the pandemic, it never even experienced a single quarter where its revenue declined year over year. The slowest its growth got down to was just a single quarter when revenue growth slowed to only 1.2% year over year.
In fact, since CT REIT went public in 2013, it’s never had a quarter where its revenue declined year over year, showing why it’s one of the best defensive stocks you can buy.
Furthermore, in addition to the stability that CT REIT offers investors after pulling back slightly, it now offers a distribution yield that’s just shy of 5.8%. And not only is that a significant yield capable of earning investors tonnes of passive income, but just six months ago, that distribution had a yield of just 4.8%.
So, if you’re looking for some of the top defensive stocks you can buy today, CT REIT is one of the best REITs in Canada to consider.
A top investment to buy if you’re looking for defensive stocks in this environment
Another high-quality REIT that has to be considered one of the best defensive stocks you can buy is Granite REIT (TSX:GRT.UN)(NYSE:GRP.U), an industrial REIT with assets in several continents around the world.
Granite is one of the best REITs you can buy now due to its stability, the passive income it provides, its current discount, and, of course, its long-term growth potential.
Industrial REITs are some of the best to buy and hold for the long haul, as their fundamentals continue to be impressive. Demand for warehouse space has been outpacing new supply for years, resulting in significant upside for stocks like Granite.
Plus, because it’s already sold off so significantly, not only is there much less downside in the stock, making it one of the most defensive stocks in real estate, but its yield has also risen considerably.
Just nine months ago, Granite’s distribution had a yield of 2.9%. Today, it offers a yield of more than 4.5% after the stock has pulled back.
Therefore, if you’re looking to buy top defensive stocks for your portfolio in this environment, Granite is one of the best REITs that there is.
Before you consider Ct Real Estate Investment Trust, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in September 2022 ... and Ct Real Estate Investment Trust wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 9/14/22
Fool contributor Daniel Da Costa has no position in any of the stocks mentioned. The Motley Fool recommends GRANITE REAL ESTATE INVESTMENT TRUST. The Motley Fool has a disclosure policy.