Is the U.S. economy in a recession? And if not, is it heading in that direction? If you ask a room full of experts, you're likely to get several different responses.

That's why it's such a good idea to plan for whatever happens. There are some stocks that are well positioned to make it through recessions unscathed, and also deliver excellent growth when the economy is strong. Two in particular that fall into this category are real estate investment trusts, or REITs, Realty Income (O 1.46%) and Physicians Realty Trust (DOC).

A resilient retail stock

Realty Income invests in freestanding (single tenant) properties, and about 80% of its tenants are retailers. But these aren't just any retailers. Realty Income specifically targets properties occupied by businesses that are recession-resistant and/or not vulnerable to e-commerce disruption. In fact, most of its tenants fall into one or more of three categories:

  • Non-discretionary: Retailers that sell things people need. Drug stores like top tenant Walgreens are good examples.
  • Discount-oriented: Retailers that specialize in bargains tend to do well in tough times when consumers need to cut back. Dollar stores and warehouse clubs have a big presence in Realty Income's portfolio.
  • Service-based: Businesses that sell a service, not a physical product, are inherently less vulnerable to e-commerce headwinds. Fitness centers are a good example.

In addition, Realty Income's tenants sign long-term net leases with gradual rent increases built in. All Realty Income needs to do is get a quality tenant in place and enjoy decades of predictable and growing income.

The proof is in the numbers. Realty Income has increased its dividend for 99 consecutive quarters, including throughout the dot-com crash, financial crisis, and COVID-19 pandemic. What's more, it has handily beaten the S&P 500's total returns since its 1994 NYSE listing.

Recession-proof tenants and excellent lease terms

Physicians Realty Trust, like the name implies, specializes in medical real estate -- specifically medical office buildings that are affiliated with major health systems. Like Realty Income, Physicians Realty Trust grows by acquiring properties occupied by top-notch tenants and sits back and collects steady rental income.

It's tough to imagine a commercial property type that is more recession-proof than medical offices. People need healthcare no matter what the economy is doing. Even during the pandemic's early days, medical offices played a major role in continual access to healthcare as many hospitals suspended elective procedures.

Physicians Realty Trust hasn't been around for nearly as long as Realty Income, but it pays a 5.2% dividend yield that is well covered by its earnings. With most medical offices owned by their health systems or tenants, there should be plenty of room for growth.

Buy for the long term

I own both of these stocks in my retirement account and plan to hold them for decades. I also hope to eventually use their dividend payments as part of my retirement income. But I have no idea what they're going to do in the short term. The businesses should be just fine during any economic climate, but their stock prices can certainly be volatile over short periods. If you choose to invest in either, it's smart to approach these as long-term compounding plays.