Real estate investment trusts (REIT) are a solid way of bringing in passive income, and during an economic downturn they couldn’t be more necessary. However, passive income isn’t great if these real estate stocks are losing returns.
Today, I’m going to focus on three solid real estate stocks investors should therefore consider. These stocks have done well during the last few months, with market-beating performance to provide some protection to your portfolio. Further, each offers substantial passive income you can count on.
So let’s get right to it.
Slate Grocery REIT
First up, I’d consider Slate Grocery REIT (TSX: SGR.UN). Slate is a strong choice among real estate stocks because it’s anchored to grocery chains in the United States. This proved essential during the pandemic, as it’s “critical real estate” the country needs.
Because of this, Slate was able to continue expanding, and has even done well in an inflationary environment. In fact, shares are about where they were at the start of 2022, compared to a decline in the TSX of 14% year to date.
And it’s one of the real estate stocks that still remains a deal. It currently trades at 5.8 times earnings, and offers a whopping 9.26% dividend yield! Investors can look forward to it being paid out every month.
Dream Industrial
Another strong choice is Dream Industrial REIT (TSX: DIR.UN), as industrial properties are becoming more essential in this disrupted supply-chain environment. Yet shares of the company continue to fall, even though the company has performed quite well this year.
Dream REIT completed several new acquisitions during the last quarter, and saw net income increase 7% year over year. Further, net rental income was up 34.5% year over year, with total assets up 15% as well to $7 billion! As the company continues its stellar performance, it’s an opportune time to pick up this real estate stock while it’s down.
Shares are down an incredible 36% year to date, though for no good reason, and the stock trades at 2.8 times earnings as of writing. Further, you can lock in a 6.75% dividend yield dished out monthly, and sleep well knowing it would take just 51.4% of its equity to cover all debts, even if shares fall further.
Brookfield Infrastructure
Finally, Brookfield Infrastructure Partners LP (TSX: BIP.UN)(NYSE: BIP) is the last I would consider for its focus on infrastructure. Infrastructure includes waste, water, and of course power. Its the latter that has done so well for the company, but it hasn’t shied away from being a part of every type of infrastructure asset, all around the world.
During its last quarter, funds from operations increased 30% year over year, and it remains on track to continue its investment activities to increase revenue. Infrastructure is of course necessary, so if you’re looking at real estate stocks this is certainly one to consider.
Yet again, shares are down 8.5% year to date, falling quite significantly in the last month as the market fell. This provides an opportunity to lock in a 4.26% dividend yield while shares are down about 17% in the last month.
Bottom line
Not all real estate stocks are equal, especially during a downturn. Yet all three of these stocks should continue doing well in terms of performance. So investors should consider adding them to their watchlist and locking in substantial yields while they still can.
