The utilities sector isn’t setting the world on fire this year. For example, the Utilities Select Sector SPDR (NYSEArca: XLU), the largest exchange traded fund dedicated to the sector, is up just 7.26% year-to-date while the S&P 500 is higher by 21.19%.

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Still, utilities stocks are attractive on the basis of yield. XLU sports a 30-day SEC yield of 3.03%, which is more than twice what investors earn on the S&P 500. More goods news for income-hungry investors: A buying opportunity could be afoot in this defensive sector.

“Utility stocks don’t get much respect these days. The sector has lagged behind the market this year, unable to get traction. It has created an interesting buying opportunity for yield-hungry investors,” reports Lawrence Strauss for Barron’s.

With bond yields still low and the sector’s dividend yield impressive, utilities stocks could be worth revisiting by income-needy investors and those that are looking to dial back risk, including retirees. Plus, the sector isn’t overvalued today, which is worth noting because it often is owing to its defensive positioning and above-average yields.

One of the utilities stocks popping on Barron’s screen for undervalued names in the sector is Duke Energy (NYSE:DUK). That’s XLU’s second-largest component at a weight of 8.42%, as of Oct. 21. Another attractively valued XLU holding, according to the screen, is Exelon (NYSE:EXC), the ETF’s fifth-largest holding at a weight of 5.3%. Additionally, it appears as though utilities stocks can deal with high natural gas prices.

“Another worry tied to inflation: Natural-gas prices have roughly doubled since early in the year to around $5 per million British thermal units,” according to Barron’s. “But utilities generally can pass through a rise in natural-gas prices to customers. One potential concern, though, is that a surge in prices could make it harder for a utility to secure a rate increase to cover investments for its grid.”

Investors considering XLU should also assess how NextEra Energy (NYSE:NEE) is shaping up because that stock is by far the ETF’s largest holding, commanding a weight of 17.46%. It’s also one of the old guard utilities with the most exposure to renewable energy. In the third quarter, NextEra added 2,160 megawatts (MW) of renewable projects to its backlog.

In that quarter, “NextEra Energy Resources added 1,240 MW of new wind projects in its best-ever quarter of wind additions, as well as 515 MW of solar projects and 345 MW of energy storage projects to its renewables and storage backlog,” according to Seeking Alpha.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.