Benzinga - Although the all-items index increased 7.7% for the twelve months ending October, this was the smallest 12-month increase since the period ending January 2022.
Meanwhile, food inflation increased by 0.6% in October to 10.9% unadjusted year-over-year.
With food prices facing relentless inflationary pressures, investing in consumer staples stocks or real estate investment trusts (REITs) that own grocery stores properties may not be a bad hedge against a recession. This is because weakening purchasing power amongst consumers will push them to purchase more necessities and steer away from discretionary spending.
Also Read: It's Cyber Monday: These 2 Mall REITs Are Offering Investors Better Than Average Yields
In turn, grocery store REITs will continue to collect their tenants' rent payments, which will be less risky than a multi-family REIT per se, especially with the Federal Reserve's raising interest rates. As of Sept. 30, 2019, SP Global reported that retail REITs produced a trailing ten-year return of 10.1%.
Here are two grocery store real estate investment trust paying dividends.
- Slate Grocery REIT (OTC: SRRTF) is offering a dividend yield of 7.61% or 86 cents per share annually, utilizing monthly payments, with an infrequent track record of increasing its dividends. Slate Grocery is an unincorporated, open-ended mutual fund trust leading investors in U.S. grocery-anchored real estate, generating growth for unitholders by acquiring well-positioned properties. On Sept. 30, Slate Grocery owned 121 properties, of which, 107 properties are in entities consolidated by the REIT. The remaining 14 properties are accounted as joint venture investments. Slate Grocery properties include Bloomingdale Plaza, Errol Plaza, Meres Town Center, Oak Hill Village, Salerno Village Square (NYSE:SQ), and a joint venture on properties with Walmart (NYSE: NYSE:WMT) and Kroger (NYSE: NYSE:KR).
- Regency Centers Corporation (NASDAQ: REG) is offering a dividend yield of 3.96% or $2.60 per share annually, conducting quarterly payments, with a track record of increasing its dividends once in the past year. Regency Centers is the largest shopping center-focused retail REIT, and is primarily composed of grocery-anchored centers, with 80% of properties featuring a grocery anchor and grocery stores representing 20% of the annual base rent. Regency Centers portfolio includes an interest in over 404 properties, which includes nearly 55 million square feet of retail space. As Regency Centers is geographically diversified with at least 22 regional offices, no single market represents more than 14% of total company net operating income, with some of its tenants including CVS Health (NYSE: CVS), Staples, Target (NYSE: NYSE:TGT), Publix Super Market, Kohl's (NYSE: KSS), and Walgreens Boots Alliance (NASDAQ: NASDAQ:WBA), to name a few.
- To read about the latest developments in the industry, check out Benzinga's real estate home page