With an impressive 7.5% yield, is this ‘defensive’ REIT worth buying today?

With the UK stock market currently in the red, most investors are looking to real estate investment trusts (REITs) for sanctuary. But are they really the ‘safe haven’ that some believe them to be? Or is it a matter of buyer beware?

Let’s consider both sides of the argument by looking at one very productive example that today (11 March) released its results for the six months ended 31 December 2025.

Bricks and mortar

Supermarket Income REIT (LSE:SUPR), which owns a portfolio of freehold and leasehold grocery stores in the UK and France worth £2.06bn, has paid a dividend of 6.15pa over the past 12 months. At the current share price of 82.1p, it means the stock is yielding 7.5%.

But things are getting better. Its payout has been increased every year since it was listed in July 2017. This good record is partly due to the fact that – like all REITs – it must return at least 90% of its rental income to shareholders each year in the form of dividends.

However, the trust must still be profitable to be in a position to reward shareholders. After all, 90% of something is missing.

Importantly, the trust is able to target continued dividend payments because the income is protected by long-term leases that are linked to inflation. And because of the quality of its tenants – Tesco again Places to stay in Sainsbury just to count two – full of people and no bad debts.

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Plan and survive

I really like Supermarket Income because supermarkets have evolved over the years to become the center of the grocery market. As more people shop online, many are beginning to believe that the industry will shift to centralized distribution centers. However, major retailers have successfully adapted to this challenge.

Whether someone wants to visit a store, have groceries delivered, or go pick up and buy online, the omnichannel supermarket is still important. I don’t think that was a coincidence The Ocado GroupIt is now planning to close some of its customer fulfillment centers.

In my opinion, these qualities make Supermarket Income a great defensive stock. Both the REIT business model – and the grocery sector – can be attractive in times of market volatility. That’s why I own shares in REITs and why I think others might consider adding more to their portfolios.

No regrets

However, some are wary of REITs because, in general, they tend to lend a lot of money. That’s because most use debt to grow. At 31 December 2025, Supermarket Income’s balance sheet revealed borrowings of £980m. This gives it a loan-to-value (LTV) of 43%, taking into account further transactions in 2026. Higher interest rates will lead to increased borrowing costs and reduced profits.

Some investors do not like the cyclical nature of the property market, particularly in the UK. If real estate prices fall, the value of the trust’s assets will fall and its LTV will rise. This could limit its ability to borrow in the future.

But I still estimate Supermarket Income. Compared to the same period last year, its latest results show an 11% increase in rental income and a 0.1% improvement in portfolio yield. The group aims for a 2% increase in its annual budget from its next financial year onwards. That’s why I’m happy with my choice of REIT.