Is a recession looming just over the horizon? Maybe. Maybe not. But sooner or later, the next recession will come, because the economy is cyclical.
Some investors, such as young adults, can ride out recessions and bear markets. They can leave their money in higher-risk, higher-return investments and let the market dive and soar. Other investors, such as those entering retirement, have less risk tolerance.
People might become more conscious of their utility bills in recessions, but they still need electricity and heat.
Utility stocks have a reputation for stability and strong dividends. In the worst recession in living memory, utility stocks did fall in value. From a 2007 peak to the 2009 trough, Ciovacco Capital Management notes that 18 of the largest utility stocks in the U.S. fell by around 30% on average.
As awful as that sounds, the S&P 500 fell by over 50%. And that’s leaving in all the defensive stock sectors that didn’t fall as hard as others.
Likewise, consumer staples such as companies that manufacture toilet paper fare better in recessions than other sectors. Examples of consumer staple stocks include Walmart, Costco, Proctor & Gamble, Philip Morris, Kroger, and McCormick & Co.
Consumers may try to spend less on groceries and personal care products like toothpaste, but again, they still need them.
If you raise your eyebrows at the notion of a tobacco company being recession-resilient, given that their products are discretionary, consider why people smoke cigarettes. Many smokers buy cigarettes for stress relief — which can drive sales up during recessions, not down.
Rounding out the usual suspects of defensive stocks, many healthcare stocks weather recessions better than other sectors. Not all healthcare companies are created equal however — at least in recession-resilience.
Companies providing urgent care, such as Concentra, NextCare and FastMed Urgent Care, will continue seeing more business during recessions than, say, elective surgery providers.
Again, you can still expect these companies’ stocks to fall in a recession, but not as far as most other stock sectors.
Some investors come at healthcare from another angle: real estate.
They buy either REITs that own healthcare facilities, or they invest in private equity real estate funds or syndications that own one or more facilities. While REITs have the advantage of being more liquid, that liquidity comes hand-in-hand with volatility. Their prices drop right alongside stocks and ETFs in a recession, although their high dividend yields can take the sting out of those price dips.
Private equity real estate investments come with little or no liquidity, and often with a long-term commitment. But that often lets them ride out recessions and market fluctuations with no long-term losses.
The Great Recession didn’t just see stock markets collapse. Real estate markets also fell face first, from residential to commercial to industrial.
All property types fell in value — except one. Investment firm Mainstay Global notes that while other real estate asset classes fell by 25 to 67% in 2008, self-storage investments actually rose by 5%.
Why? Because when residents and businesses downsize during recessions, they often want to keep their belongings. Without room in their new locations, they rent a storage unit for their prized possessions until they can move again.
Again, you can invest in self-storage through either publicly-traded REITs or private equity syndications or funds.
To begin with, mobile home parks represent the ultimate affordable housing.
“Affordable housing demand increases during recessions, and mobile homes provide a classic example,” noted real estate investor Austin Glanzer of Noble House Buyers.
Second, mobile home parks are the only real estate asset class that has a shrinking supply, as outlined by the Keel Team private equity firm. They specialize in mobile home parks, and I’ve invested with them myself through a real estate investment club.
Most important of all, it’s cheaper for mobile home owners to pay their lot rents than to move their homes. Mobile home parks have two possible models: Owning and renting out each mobile home, or solely leasing the lots to residents who own their own mobile homes.
It costs an average of $6,500 to move a single-wide and $11,500 to move a double-wide home in 2025, according to This Old Home. Compare that to a $500 lot rent, and which bill do you think the renter will pay if they feel pinched in a recession?
Plus, avoiding ownership of the homes cuts down on maintenance and repair costs.
“Since tenants own their homes, investors have fewer maintenance expenses, for more predictable income during downturns and otherwise,” added Glanzer.
I’ve also invested in multifamily property syndications with rent protections in place, as a recession-resilient investment. For example, I’ve invested in several property syndications where the owner negotiated a property tax abatement in exchange for setting aside half of the units for affordable housing with rent restrictions.
Even in an economy with a low unemployment rate, there’s a waitlist for those units. What would happen in a recession, when below-market rents become even more coveted?
Some investors also like properties accepting government rent money, as a protection against recessions. James Heller, real estate investor and owner of The Atlas Portfolio, likes these programs for stable cash flow even during downturns.
“Government-backed rental programs, such as Section 8, provide investors with a reliable income stream since the government guarantees most of the rent,” Heller explained.
Renters don’t want to lose their vouchers by defaulting, creating extra incentive to stay current.
While real estate syndications typically require a $50,000 to $100,000 minimum investment, you can often invest $5,000 by going in on them with an investment club. Or you can buy properties directly, although most investors have little interest in becoming a landlord.
Beware however that many multifamily investments do struggle during downturns. Look for some kind of additional rent protection if you want a buffer against recessions.
