Utility stock ETF Investing: High Yields, Share Price Stability and Potential for Growth. What's not to Love?
Utility stock ETF investing brings a nice mix of high dividend yields, share price stability and potential for capital appreciation - and that's just an individual stock. Add to the mix the diversification an exchange traded fund (ETF) brings to the table and these instruments become very appealing.
With savings and money markets paying next to nothing and Utilities providing virtually the same creditworthiness as Treasuries when spread across the entire sector, it becomes compelling to consider such an instrument over US Treasuries, being mindful of course, that in times of absolute panic, Treasuries become the destination of last resort when flocking to safety, not Utilities necessarily.
However, with Treasuries yielding in the low 2-3% range and many utilities delivering dividend payouts in the 5-6% range with capital appreciation and dividend increases into the future, an ETF to spread that risk around may be optimal for the income portion of your portfolio.
There are 3 major Utility ETFs currently:
iShares Dow Jones US Utilities Sector Index Fund (IDU)
Utilities Select Sector SPDR (XLU)
Vanguard Utilities ETF (VPU)
As of the time of this writing, they're all delivering yields of 4-5%, noticeably above any other typical
Legitimate High Yield Investments
If the prospect of high yields and exchange traded fund diversification are of interest to you, check out other
High Yield ETFs
and also consider
Learn About Individual High Yield Utility Stocks
Real Estate Investment Trusts
Return from Utility Stock ETF Investing to Best Dividend Stocks