“On the bright side, utilities are much less likely to suffer a catastrophic drop in income than other sectors, but dividend growth may suffer, especially if interest rate increases pinch the debt heavy utilities sector. The heavy weighting in utilities makes DVY relatively defensive and better positioned for capital preservation versus the competition,” adds Sauer.
Plus, it is worth remembering that utilities stocks are guaranteed to fall when rates rise. When 10-year Treasury yields climbed last year, DVY still gained nearly 29% when accounting for paid dividends. [Getting Defensive With Utilities ETFs]
iShares Select Dividend ETF
Tom Lydon’s clients own shares of DVY.