Moreover, Michael Khouw of Dash Financial points out that valuations are beginning to look pricey as well.
“When you look at valuation in the utility space, a lot of these names are at, or well above, their long-term average multiples,” Khouw said. And “if anything, I could see rates go a little bit higher rather than lower.”
XLU is trading at a 17.2 price-to-earnings and a 1.6 price-to-book. In comparison, the S&P 500 index shows a 17.1 P/E and a 2.4 P/B.
Utilities Select Sector SPDR
For more information on the utilities sector, visit our utilities category.
Max Chen contributed to this article.