The shares of the Utilities Select Sector exchange traded fund (NYSE: XLU – $51.86) have been flat over the past 52-weeks. But including dividends it has returned about 3.84% to investors, thanks to the healthy $1.83 annualized dividend, which yields about 3.3% at current levels. Traders have been moving some funds into XLU as a means of protecting against slower international growth and to take advantage of its defensive characteristics. As of the latest reporting period, the top ten holding of the ETF – which follows the corresponding index – is as follows:
The index is weighted heavily in large-cap U.S. based electric utilities and diversified utility companies. About 5% of its holdings are in independent power, renewable energy and water utilities and 15% of the fund is invested in mid-cap sized names. As we head into what may be a volatile 2019, I am maintaining a 5% allocation for income investors.