Best Utilities ETFs (2024)

FAQs

Does Vanguard have a utilities ETF? ›

Vanguard Utilities ETF seeks to track the performance of a benchmark index that measures the investment return of utilities stocks.

Utilities Equities ETFs offer exposure to stocks in the utility sector. Funds in this category tend to be more stable than the broad market while offering attractive dividend yields, but their growth opportunities are generally more limited than the wider market.

Stable stock prices.

Unlike other riskier, more volatile investments, utility stocks offer very steady prices. Investing in individual stocks is still riskier than diversified index funds, but generally speaking utilities stocks are considered “safe” equity investments.

Vanguard Utilities Index Fund seeks to track the investment performance of the MSCI US Investable Market Utilities 25/50 Index, a benchmark of large-, mid-, and small-cap U.S. stocks in the utilities sector, as classified under the Global Industry Classification Standard (GICS).

The Vanguard Energy ETF (VDE) offers investors a diverse play on the oil sector. Read on to find out more about this ETF. including its top holdings, returns, and fees. The Vanguard Energy ETF invests in a wide range of oil companies, with a focus on the industry giants like ExxonMobil and Chevron.

Among the Global Industry Classification Standard (GICS) 11 stock sectors, consumer staples, utilities, healthcare, and energy are among the most recession resistant. That is because they are always in demand regardless of the state of the business cycle.

Do utility stocks do well during inflation? ›

“It's unusual relative to past history that utilities would be the second best-performing sector when you have sky-high inflation and interest rates rising higher.” On the inflation front, rising prices increase input costs for utility providers.

During times of economic downturns with low interest rates, utilities become attractive. They exhibit lower volatility and provide a desirable source of predictable investment returns from the dividends they pay on their shares.

FIUIX - Fidelity ® Telecom and Utilities Fund | Fidelity Investments.

Vanguard Utilities ETF (VPU)

VPU has a dividend yield of 3.17% and paid $4.71 per share in the past year. The dividend is paid every three months and the last ex-dividend date was Mar 24, 2023.

Simply put, a utility fund is a mutual fund that invests primarily in utilities. These funds will often focus on a particular market such as natural gas or crude oil and focus on areas of that sector such as drilling, electric utilities, or distribution.

The largest Oil ETF is the United States Oil Fund LP USO with $1.61B in assets.

Vanguard's unique cost structure, the economies of scale it has achieved, and the total number of assets under management (AUM) allow it to offer its ETFs at the lowest cost available in the market. We've listed 10 of the firm's cheapest ETFs by their expense ratio.

What is the largest ETF for clean energy? ›

Berkshire Hathaway (BRK. B (opens in new tab), $195.20), of which he is chairman and CEO, tops the list of the best S&P 500 stocks of the past 50 years, and it is the only one that does not pay a dividend.

The stocks that currently have the highest dividend yields on the S&P 500 are Altria Group (MO -0.24%) (8.2%); V.F. Corp (VFC 1.74%) (6.9%); Newell Brands (NWL 0.11%) and Verizon Communications (VZ -2.18%) (6.3% each); and Simon Property Group (SPG 0.55%) (6.1%).

Our recommendation for the best overall dividend ETF is Vanguard High Dividend Yield (VYM). This ETF offers a combination of high diversification, a low expense ratio, a low turnover, and strong yields.

Dividend ETFs may be a great option if you're looking to build an income stream over time–but you don't want the job of picking stocks. Lean into diversified funds with low expense ratios and reinvest those dividends if you can.

Both stocks and ETFs provide investors with dividends, and each is traded during the day on stock exchanges. Individual stocks are much riskier but can yield higher returns. ETFs are relatively low risk and provide stable, if less profitable, returns.

Think about the things consumers will need no matter what – those are the sectors that tend to perform well during market downturns. Even amid high inflation, people still need gas, groceries and health care, so things such as consumer staples and utilities usually weather bear markets better than others.

Do utility stocks go up in a rising rate environment? ›

Utility stocks are definitely subject to interest rate risk and can be significantly impacted by changes in interest rates.

A recession is “a significant decline in economic activity spread across the economy, lasting more than a few months.” Industries affected most include retail, restaurants, travel/tourism, leisure/hospitality, service purveyors, real estate, & manufacturing/warehouse.

Skyrocketing utility input costs and rising customer rates have caused many utility companies' cash-flow margins to decline. The Utility sector ETF XLU has had no dividend growth since 2020 and may see dividends decline as strain in the electricity market grows.

Utilities have a lot of debt, and higher rates make it more expensive to raise money and refinance existing debt. As well, their shares, which typically offer high yields, compete with fixed-income instruments for investor interest.

However, investors should understand that prices of utility stocks can decline significantly over the short term (without a change in company fundamentals) due to increases in long-term interest rates.

With a strong capital pipeline, increasing regulatory support, and corrected valuations that remain historically rich, utilities are poised to return to steady growth without volatility. “After a volatile stretch for utilities stocks, we expect a return to steady, fundamental growth.”

For 2023, the outlook for the utilities sector is strong. The sector's defensive characteristics could continue to look attractive to investors seeking shelter during market and economic choppiness.

"Although every investor has different growth, income and risk profiles, the average investor can be comfortable holding a 10 percent to 15 percent position."

About Fidelity® MSCI Utilities ETF

The fund invests at least 80% of assets in securities included in the fund's underlying index.

Fidelity MSCI Energy Index ETF (FENY) | Fidelity Institutional.

Does Fidelity have a water ETF? ›

Fidelity Water Sustainability Fund (FLOWX) | Fidelity Institutional.

Vanguard High Dividend Yield ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VYM is an outstanding option for investors seeking exposure to the Style Box - Large Cap Value segment of the market.

Vanguard High Dividend Yield ETF is an exchange-traded share class of Vanguard High Dividend Yield Index Fund. Stocks included in the High Dividend Yield Index have a history of paying above-average dividends. The fund will hold all the stocks in the index in approximately the same weightings as in the index.

This investment option is one of the best exchange-traded funds with high dividends. It is an excellent choice for beginners and experienced investors alike. It is the Vanguard High Dividend Yield ETF. This ETF trades on the New York Stock Exchange (NYSE) under the stock ticker symbol VYM (NYSEARCA: VYM).

With low-demand elasticity and reliable revenue streams, utility companies can afford to pay consistent and relatively high dividends to their shareholders. For this reason, many utility stocks are almost treated like bonds by income investors who rely on their holdings for revenue.

Vanguard Information Technology ETF (VGT) has a higher volatility of 5.02% compared to Invesco QQQ (QQQ) at 4.67%. This indicates that VGT's price experiences larger fluctuations and is considered to be riskier than QQQ based on this measure. The chart below showcases a comparison of their rolling one-month volatility.

Fidelity and Vanguard both do a good job keeping costs fairly low, but Fidelity has a slight edge overall. Both brokers charge zero commission for stock and ETF trades, but Fidelity charges $0.65 per contract on options trades, while Vanguard charges $1 per contract for customers with less than $1 million in assets.

Bottom Line. Overall, Vanguard and Fidelity are both great choices for those interested in investing. They offer a wide range of investment options, low costs, and hands-off or active management depending on your preference. When it comes to index funds, Vanguard is hard to beat, with hundreds of low-cost options.

Invesco Nasdaq 100 ETF

It's simply a cheaper version of the QQQ.

Which is the best ETF from Fidelity? ›

Best Fidelity ETF #1: Fidelity MSCI Information Technology Index ETF (FTEC) A passively managed Fidelity fund, the Fidelity MSCI Information Technology Index ETF (FTEC) is a popular sector ETF that includes about 360 different tech stocks.

Fidelity® Total Market Index Fund is a diversified domestic all-cap equity strategy that seeks to closely track the aggregate returns and characteristics of the Dow Jones U.S. Total Stock Market IndexSM.

The single biggest risk in ETFs is market risk. Like a mutual fund or a closed-end fund, ETFs are only an investment vehicle—a wrapper for their underlying investment. So if you buy an S&P 500 ETF and the S&P 500 goes down 50%, nothing about how cheap, tax efficient, or transparent an ETF is will help you.