Investors looking to participate in a new growth phase for electricity demand by purchasing the Utilities Select Sector SPDR ETF (XLU) might be discouraged by its massive run over the past year.
We'll review a way to play it with options that adds a buffer of protection.
XLU .SPX mountain 2023-10-23 Utilities Select Sector SPDR Fund since October low Despite this strong performance, the utilities select sector index still trades at just over 19 times forward earnings, a much cheaper multiple than the S & P's 23.5 times, and typically trades with significantly lower volatility as well.
Spurring the economy will likely increase demand, but lowering rates improves the relative attractiveness of utilities for fixed-income investors as well.
The trade XLU has an annual dividend yield of 2.8% and would make a fine addition to one's portfolio.
Persons:
EVs
Organizations:
Utilities, Fund, CNBC, NBC UNIVERSAL
Locations:
U.S