Chris’ note: If you’re like most folks, you’re worried about the impact a recession will have on your nest egg. And that’s only natural. Some sectors get hit hard when the economy slumps.
But other sectors not only survive recessions, they thrive in them.
That’s the message today from friend of Legacy Research Brad Thomas. He’s a former real estate developer who’s become one of America’s most widely read income investing experts.
As you’ll hear from him below, you don’t have to fear a recession… if you invest in the right sectors. And right now, two stand out for Brad above all others.
We just got another recession warning…
It has nothing to do with an inverted yield curve… the stock market… or any of fancy models Wall Street analysts use to spot downturns.
It’s from Costco.
The wholesale club says Americans are buying less beef.
And it’s not because they’re trying to be healthier. It’s because they’re trying to save a few bucks.
Instead of going for the good stuff, they’re trading down to chicken.
The cheapest form of beef – ground chuck – costs, on average, $4.74 a pound. Whole chicken costs as little as $1.87 a pound.
And Costco says it saw the same trend heading into the 2008 financial crisis and the dot-com bust at the turn of the millennium.
I’ve been saying we’re headed toward recession for a while. The economy has kept chugging along despite higher interest rates and lingering inflation. But now we’re seeing more signs of stress.
I can’t tell you when the recession will hit. Or how long it will last. But I can help you prepare your portfolio to handle the downturn.
My job is to find the safest income investments for my readers. And in a recession, you want to own companies that will not only survive but also support you with steady dependable income.
As I’ll show you today, Costco and other grocery stores are great recession-resistant businesses. And thanks to real estate investment trusts – or REITs – you can earn high yields as landlord to these stores.
Everybody Needs to Eat
One of my first jobs as a teenager was as a courtesy clerk at our local Family Mart.
Later, when I became a real estate developer, I spent a lot of time building grocery stores. I’ve built stores for Ingles Markets, Aldi, Walmart, and Ahold Delhaize, which owns chains Food Lion and Stop & Shop.
Here’s the thing about grocery stores – everybody needs to eat. And when times are tough, you don’t go to a fancy restaurant. You pick up groceries and cook at home more often.
According to a study by the National Bureau of Economic Research during the 2007-2009 recession, people changed their shopping habits. From that study…
[Consumers] increased their coupon usage, purchased more on sale, bought more generic goods, bought more goods in large sizes, made more shopping trips, and did more shopping at discount stores.
That makes sense. Folks were looking for deals to make their money stretch further. So, they bought more groceries and made more frequent shipping trips.
So, when things go south for other sectors in a recession, grocery stores stand strong.
Three Grocery REITs to Ride Out a Recession
Now, you could invest directly in the companies that run grocery stores.
But the dividends they pay aren’t that exciting. Costco yields just 0.8%. Walmart yields 1.6%. And Kroger yields 2.3%.
A better way to profit is by collecting some of the rent they spend to lease their stores.
The best way to do that is through REITs that own the shopping malls where most grocery stores are located.
I know what you’re thinking, “Brad, what about online shopping for groceries? Won’t that be a threat to these stores?”
Last year, online sales accounted for 11.2% of total grocery sales. And research firm Brick Meets Click projects online grocery sales to grow to 13.6% by 2027.
But most of that growth will be from pick-up sales. That means people will still be driving to stores to pick up their groceries, rather than having them delivered to their homes.
That means your local grocery will stick around and keep paying rent.
Here are three shopping-center-focused REITs that tend to have large grocery stores…
Regency Centers (REG) – It has 404 properties with 83% anchored by grocery stores. It yields 4.7%.
Kimco Realty (KIM) – It owns 532 properties with 81% anchored by grocery stores. It yields 5.1%
Brixmor Property Group (BRX) – It has 367 shopping centers with 73% anchored by grocery stores. It yields 5.3%.
By investing in shopping center REITs, you can benefit from the stability of grocery stores during recessions while collecting an attractive dividend.
And grocery stores are just one of the mission-critical businesses that will ride out a coming recession.
Another recession-resistant sector I’m excited about right now is data centers.
As I showed on camera here, it’s the greatest income opportunity in America today.
And it’s one of Wall Street’s most closely guarded secrets…
Set Up This “Royalty” Stream Today
You see, every time you buy something online, it sets a sequence in motion that travels through a network of communications.
And data centers are at the heart of those networks.
They’re specialized facilities that securely house computer servers and network equipment. This includes cooling equipment, electrical power systems, and network connections.
Typically, the landlords who own these buildings provide the power and cooling systems. Their customers provide their own servers as well as storage and networking equipment.
These large-data-center landlords cater to companies such as Amazon, Google, Microsoft, and Meta.
And right now, I’m recommending a strategy that targets Amazon’s data centers.
To hear more about this opportunity, and profit from this strategy, you can watch the presentation I’ve put together.
As you’ll see, you can use it to set up your own “royalty” stream starting today.
It’s like getting paid a dividend from Amazon – even though the company has never paid one and most likely never will.
Unfortunately, most Americans have been kept in the dark on this secret dividend.
In fact, I calculate that less than 1 in 10 million investors are taking advantage of this publicly available opportunity.
That’s a shame… because hedge funds and in-the-know billionaires have been raking up Amazon “royalties” for years.
Like BlackRock. Last year, the world’s largest asset manager collected $449 million in Amazon “royalties.”
And The Vanguard Group, another global giant, received a $649 million payout.
Even Ray Dalio’s Bridgewater Associates is involved.
You may have heard of it. It’s the largest hedge fund in the world.
It dumped every share of Amazon stock they owned. And it moved into Amazon’s “royalty” program.
Because with this program you’re legally mandated to get paid – even if Amazon stock goes down.
I don’t have time here to cover all the details. But you can go here now to find out more.
If you’re like most Americans, you’ll have never heard of this opportunity. But it’s the best way I know of today to get paid while you sleep. So I hope you check it out.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily