ETF Research and Analysis

by Ben Johnson, CFA
Utilities Select Sector SPDR XLU is an appealing option for investors who want broad exposure to defensive, high-yielding U.S. utilities companies. This low-cost exchange-traded fund contains only mid- and large-cap U.S.  Read more 

Bull Case

XLU is the most liquid utilities-sector ETF available.
The fund offers an attractive, stable dividend yield relative to many other sectors.
Utilities companies' fundamentals have remained strong. While energy efficiency means electricity demand is still growing but at a slower and slower rate, the sector is in great financial health with good payout ratios, leverage that is in line with acceptable levels, no imminent threat of dividend cuts, and good growth opportunities in spite of weak electricity demand. Read more 

Bear Case

Utilities face a tough regulatory environment.
Rising interest rates can hurt the fund's performance.
Low power prices could squeeze margins. Read more 

A Broader Bond Market for a Good Price 
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