The TSX today might show improvement, but Canadians still have reason to fear. While TSX today is up 6% in the last year, it’s still down significantly from 52-week highs. And there could be more reason for turbulence in the coming months, with more rate hikes expected, as the Bank of Canada aims for lower inflation.
That’s why some Canadians have turned their attention to real estate investment trusts (REIT). REITs offer stable revenue, especially if they come from safe sectors in the industrial, utility, and healthcare spaces. These sectors consistently demonstrate resilience in even the most trying economic times. Each provides investors with attractive options while they consider investments to help weather the storm and generate reliable returns.
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Industrials
The industrial sector is a strong choice for REITs, as it offers both stability and growth. This sector focuses on managing warehouses, logistics centres, and distribution facilities. No matter the economic climate, the demand for these spaces remains quite strong, as companies continue to demand storage and fulfillment no matter what’s going on.
Furthermore, even more growth is coming with e-commerce expanding and thriving in recent years. The need for industrial space continues to be of top demand and is therefore a strong investment opportunity. Perhaps one of the best right now is Granite Industrial REIT (TSX:GRT.UN).
Granite REIT holds a diverse range of industrial REITs with over 50 million square feet of properties throughout North America and Europe. It currently holds many tenants of blue-chip companies, including FedEx, Amazon, and Walmart.
Shares of Granite REIT are on par with where they were a year ago but up 19% in the last nine months. During its last earnings report, the company announced net operating income of $107.4 million, up from $91.2 million the year before. This occurred in part from net acquisition activity and expansions. Funds from operations also rose to $79.6 million. However, it recognized a loss on investment properties, with net income falling from $497.7 million to $9.8 million. Now that it’s back in fair value territory, it’s a solid buy with a dividend yield of 4.11%.
Utilities
Another area on the TSX today for REITs to consider is utilities. These companies are known as infrastructure REITs and have a focus on owning and operating the infrastructure that makes up our daily lives. This would include energy transmission, pipelines, and communication towers. This produces long-term income, which, in turn, offers stable and predictable cash flow. Even during stressful financial times, we’ll need water, electricity, and more, making these REITs quite reliable.
If you want to narrow in on utilities and a dividend set to grow, consider investing in Brookfield Infrastructure Properties (TSX:BIP.UN) as well. This REIT is a strong choice for those wanting exposure to a diverse range of infrastructure worldwide, with more growth on the way.
Brookfield stock reported net income of $23 million for the first quarter of 2023, down from $70 million the year before. Funds from operations, however, increased 12% to $554 million, with organic growth climbing 9% during the quarter year over year. More acquisitions have been underway, with even more coming down the pipeline for the company. With shares down 6% in the last year and second-quarter earnings around the corner, it could be a great time to lock in a 4.24% dividend yield.
Healthcare
If you want to get defensive with the TSX today, the healthcare sector is one to consider. This is typically a defensive investment, with healthcare REITs providing protection during economic turmoil. These REITs focus on properties such as hospitals, medical office buildings, and even parking garages to support work staff. These are great long-term investment opportunities, with more healthcare properties needed as the world expands.
One of the cheapest and best examples of these REITs is NorthWest Healthcare Properties REIT (TSX:NWH.UN). NorthWest stock invests in these properties worldwide, with average lease agreements at 14 years and occupancy at 97%.
Shares haven’t done well as the company dropped a joint venture in the United Kingdom, but it has a solid balance sheet and a strong outlook. Shares are now at their lowest point in company history, down almost 50% in the last year and 15% in the last month alone. Yet, with a 12.29% dividend yield, it’s a REIT to consider for long-term passive income.
