With above-average dividend yields and low risk exposure, defensive consumer staple sector exchange traded funds could be a safer way to play the markets.

“We think some higher-yielding Consumer Staples stocks are seen as an alternative to bonds, with opportunity for dividend increases and less risk of a price decline if interest rates rise,” writes Tom Graves, CFA, S&P Capital IQ Equity Analyst, in a research note.

So far this year, consumer staple stocks have gained 14.8%, compared to the 9.6% in the broader S&P 500. Delving deeper into the sector, agricultural products and drug retail sub sectors were the top performers, increasing 21.1% and 19.2% year-to-date through April 8, respectively. [The Other ‘Great Rotation’ to Defensive Sector ETFs]

“The S&P Capital IQ Equity Strategy Group thinks the Federal Reserve’s monetary policy, which is keeping interest rates low, is pushing income-starved investors toward high quality dividend growers, such as those found in the Consumer Staples sector,” Graves added. “The strategy group sees sector stocks benefiting from a search for quality and yield, with less market risk than there is in global cyclical stocks.”

Among consumer staples sector ETFs, S&P Capital IQ analysts have an “overweight” ranking for Consumer Staples Select Sector SPDR Fund (NYSEArca: XLP), which has a 2.71% yield, iShares Dow Jones US Consumer Goods (NYSEArca: IYK), which has a 2.01% yield, iShares S&P Global Consumer Staples Sector Index Fund (NYSEArca: KXI), which has a 2.44% yield, and Vanguard Consumer Staples Index Fund (NYSEArca: VDC), which has a 2.57% yield.

The analysts expect earnings will be bolstered by moderating commodity costs, restructuring/cost-reductions and stock repurchase activity. Moreover, U.S. companies could be looking for greater mergers and acquisitions opportunities as a way to tap into international growth.

For more information on the consumers staples sector, visit our consumer staples category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.