Getting Defensive With Utilities ETFs

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XLU “is trading at a fair premium of nearly 3% and 7% to its 50-day and 200-day simple moving averages, respectively, and this shows strength in the fund. XLU is likely to remain strong until it crosses below both of these moving average levels. Its 50-day moving average, which is around $53.32, is expected to act as a support for XLU in the short term,” according to Market Realist.

XLU and rival utilities continue to captivate yield-starved investors as the sector sports more tempting yields than are found on U.S. government debt.

XLU “currently offers a dividend yield of 3.5%, which is way higher than SPY’s 2%. Utilities’ current yield is also at a premium of 140–150 basis points to the ten-year Treasury yield. Interestingly, utilities’ average dividend yield of 3.5% is much lower than the yields of some of the top utility stocks,” notes Market Realist.

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