At the sector level, consumer staples, telecom and utilities are among income investors’ favorite destinations. Far from being growth names, stocks residing in those sectors are usually viewed as value plays and, as a result, dividend investing is often thought to be value investing.

However, just how much value those sectors are currently offering is debatable and with staples and utilities trading at elevated valuations, some popular dividend ETFs could be getting a tad pricey themselves.

Mebane Faber, portfolio manager at Cambria Investment Management, said one of his biggest concerns is high yield stocks in the U.S. while pointing out that the relative P/E of high-yield fare from defensive sectors is now elevated relative to historical norms.

That could represent a cautionary tale for some of the largest U.S.-focused dividend ETFs, such as the Vanguard Dividend Appreciation ETF (NYSEArca: VIG), the iShares Select Dividend ETF(NYSEArca: DVY) and the SPDR S&P Dividend ETF (NYSEArca: SDY). Combined, those ETFs have nearly $43.5 billion in assets under management. [ETFs for a Rising Rate Environment]

None of those ETFs are particularly heavily allocated to the telecom sector, but they do have large weights to staples and utilities names or both. Utilities and telecom names are just 1.2% of VIG’s weight, but staples check in at 23%.

SDY’s combined weight to staples, utilities and telecom is nearly 34%. Alone, utilities represent 28% of DVY’s weight. Throw in staples and the number goes north of 44%.[Dividend ETFs for Volatile Times]

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