Utilities and REITs typically have more defensive businesses that tend to hold up well in a bad economy. They are probably the best sectors to be in when the market turns south, observes income investing expert Tom Hutchinson, editor of Cabot Dividend Investor.

Nobody knows when the party will end and it is nice to own stocks built for a downturn, especially when they perform in an up market as well.

The one drawback is that after performing so well for so long, these sectors are somewhat expensive. But they still have great momentum, and the reasons that attract investors are unlikely to change anytime soon. There is still more room to run. Here are two stocks of note.

NextEra Energy (NEE) is the county’s largest utility by market cap. It’s really two utilities in one, combining a traditional regulated utility business with a vast alternative energy business. It provides both reliable cash flow and more earnings growth that a typical utility.

But that description doesn’t really do it justice. It combines perhaps the best regulated utility business in the country with the world’s largest alternative energy producer.

Its Florida Power and Light business is the country’s largest regulated utility, operating in an extremely regulatory friendly environment that also has a growing population. The NextEra Energy Resources subsidiary is a world leader in nuclear, wind and solar energy.

It combines two of the very best businesses of its kind in the world. It’s like a utility stock on steroids, providing stable income with a solid level of earnings growth and a rising dividend and the market loves it.

The stock has significantly outperformed both its utility peers and the overall market in every measurable period over the past 15 years, providing an average annual return of about 20% over the last 10.

The company has also targeted annual dividend hikes of 12% to 15% over the next several years. Most importantly, NEE performs while the market is booming and when the market struggles.

Crown Castle International (CCI) is a real estate investment trust that leases cellular technology infrastructure. More specifically, the company leases a portfolio of properties that currently includes 40,000 cell towers, 65,000 small cell towers and 70,000 miles of fiber optic cable primarily to the four largest wireless service providers.

It is an unusual REIT that is smack dab in the middle of the 5G revolution. 5G technology is a game changer that the U.S. government has prioritized. In fact, 5G has become the new arms race and the buildout will continue in haste, rain or shine.

Crown Castle is one of the leading companies in providing the necessary infrastructure to make the technology possible. I like it better than the other companies in the same business for two reasons: it specializes in small cells and it only operates in the U.S.

A 5G signal only travels about half a mile, compared to several miles for earlier generations. That means that small cell towers will be needed all over the place in order to increase the range and relieve congestion.

And Crown Castle is the small tower king, providing more than any other company. And because it operates exclusively in the U.S., it won’t have international complications screwing up the story.

The REIT has produced reliable growth for several years and should continue to thrive. The stock is somewhat expensive at current levels but, given the huge demand and growth in its area, the company should continue to grow and perform at a high level for several years to come.

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