Hide From a Bear Market With These 3 REIT Stocks

Real estate is great to own during a bear market, but be careful about where you invest. Learn why stocks like RioCan Real Estate Investment Trust (TSX:REI.UN) are your best bet.

Real estate stocks can be ideal investments to own during a bear market, but knowing which ones to buy is critical.

If you own the right companies, revenues and profits can remain stable, even during the worst downturns. Other companies, however, can go bankrupt if conditions turn for the worst.

If you want the downside protection of real estate stocks and wish to avoid major losses, pick from this list of vetted options.

RioCan REIT

With an $8 billion market cap, bargain valuation, and 5.4% dividend, RioCan (TSX:REI.UN) looks like a reliable bet for the next market downturn.

After years of growth dating back to 1993, RioCan is now one of Canada’s largest REIT stocks. Its 230 properties totaling 38 million square feet primarily focus on high density retail locations. Around half of the properties are located in the hyper-growth Toronto market, with 97.2% occupied by tenants.

RioCan’s stability comes from its focus on well-financed national retailers and franchises. For example, it has long-term deals with Bank of Montreal, Costco, Dollarama, and Walmart.

Roughly 84% of contracts are with well-known national retailers. Having a blue-chip tenant base has allowed RioCan to post industry-leading contract renewal rates.

The focus on retail does provide some variability versus other sectors of the market, but RioCan is one of the better picks within its niche.

H&R REIT

At a $6.5 billion valuation and 6% dividend, H&R (TSX:HR.UN) is also one of Canada’s largest REITs.

Instead of a singular focus, the company has a broad spectrum of interests from office and retail to industrial and residential. In total, its properties comprise more than 43 million square feet.

Public since 1996, H&R has one of the longest and strongest track records within the Canadian REIT universe. Shares have doubled since 2000, all while providing a healthy annual dividend of 5% or greater. In total, the stock has generated impressive 13% annual total returns over its history.

There’s no magic formula here — just a dedicated management team that insists on a long-term focus. The net asset value per share is currently around $26. With a recent share price of just $23, now is your chance to gain exposure to H&R at a discount.

Inovalis REIT

Looking at the share price movement, there’s not much special about this $200 million REIT. Over the past five years, Inovalis’s (TSX:INO.UN) stock price has been stuck between $9 and $10 per share.

When you factor in the dividend, however, things get interesting.

Currently, the dividend yield stands at an impressive 8.4%. Inovalis has been paying the same payout each month for the past five years, without ever skipping or reducing the payment.

The most interesting characteristic of this REIT is that its properties are located abroad — specifically, in Germany and France. The company’s 1.3 million square feet of office property is 93% leased with average remaining lease term of nearly five years.

Due to its international focus, Inovalis looks like an ideal way to diversify your portfolio in the event of a bear market. REITs are already less volatile than the overall market, and having exposure to regions beyond North America can greatly mitigate domestic swings.

This is one of the best picks on this list if you’re specifically worried about a Canadian recession.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ryan Vanzo has no position in any stocks mentioned. Inovalis is a recommendation of Dividend Investor Canada.

More on Dividend Stocks

Dividend Stocks

The 2 Best Canadian Blue-Chip Stocks to Buy Now

Blue-chip stocks can be some of the best stocks to have in any portfolio. But when they're trending upwards, investors…

Read more »

Canadian dollars in a magnifying glass
Dividend Stocks

Here Are My Top 3 Dividend Stocks to Buy Now

These top dividends stocks have consistently paid and increased their dividends. Further, this trend will continue.

Read more »

dividends can compound over time
Dividend Stocks

Want a 7% Yield? The 3 TSX Stocks to Buy Today

These TSX stocks are offering high yields of over 7%, making them attractive for investors seeking steady passive income.

Read more »

how to save money
Dividend Stocks

The Smartest Dividend Stocks to Buy With $200 Right Now

These smartest dividend stocks can consistently pay and increase their dividends in the coming years, irrespective of the macro uncertainty.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

3 Utility Stocks That Are Smart Buys for Canadians in November

These utility stocks benefit from regulated businesses and generate predictable cash flows that support higher dividend payouts.

Read more »

Start line on the highway
Dividend Stocks

Invest $10,000 in This Dividend Stock for $600 in Passive Income

Do you want to generate passive income? Forget the rental unit! This option will save you the mortgage yet still…

Read more »

Senior uses a laptop computer
Dividend Stocks

1 Reliable Dividend Stock for the Ultimate Retirement Income Stream

TD Bank (TSX:TD) shares are way too cheap with way too swollen a yield for retirees to pass up right…

Read more »

A worker drinks out of a mug in an office.
Dividend Stocks

Is Brookfield Infrastructure Partners a Buy for its 4.75% Yield?

Brookfield Infrastructure Partners (BIP) has a 4.75% dividend yield. Is it worth it?

Read more »