“Consumer spending has been increasing over the past couple months and consumer sentiment is rising. Consumer psychology is an important factor in whether there is economic growth,” according to InvestorPlace. “According to the Bureau of Economic Analysis, consumer spending in the U.S. generates about 70% of the country’s GDP. That means, we live in a consumer-generated economy.”

In the early part of 2016, defensive sectors, such as staples, were leaders, but that trend has reversed. The cyclical energy and technology sectors are now this year’s best-performing groups. That could be further confirmation investors expect interest rates to rise because cyclical sectors usually perform well as borrowing costs increase.

Staples stocks are comparably valued to their consumer discretionary peers, but some market observers argue that possible increases in household debt would make staples more attractive while wage growth would likely benefit both consumer sectors.

“VDC is handing out a very respectable, near-3% dividend. This is a factor in the ETF’s total return, meaning that we’re looking at a minimum return of 3% just for holding VDC. That’s a pretty good head start. And it’s the highest dividend given out by the top consumer staples exchange-traded funds,” adds InvestorPlace.

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

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