“Because utility companies tend to offer a stable dividend, it is often seen as a bond-like stocks. As interest rate hikes, many are concerned whether the stock prices of these companies will fall or not. While the stock prices of utility companies will inevitably be pressured, historical record shows that these stocks do continue to grow,” according to Seeking Alpha.
Related: Summer Investing: A Boring Sector Heats Up
No sector is as negatively correlated to rising interest rates as utilities, meaning the longer the Fed resists raising interest rates, the longer high-yielding utilities stocks and ETFs remain compelling destinations for yield-starved investors.
Year-to-date, investors have pulled $112.7 million from XLU, but the ETF has seen inflows of $205.5 million to start the third quarter.
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