Utilities SPDR (ETF) (XLU) — This exchange-traded fund (ETF) provides investment results that generally correspond to the price and yield performance of the utility sector of the S&P 500.
XLU is comprised of high-quality utility stocks, with its top holdings including Duke Energy Corp (NYSE:DUK), NextEra Energy Inc (NYSE:NEE), Southern Co (NYSE:SO), Dominion Resources, Inc. (NYSE:D), Exelon Corporation (NYSE:EXC), American Electric Power Company Inc (NYSE:AEP), PG&E Corporation (NYSE:PCG), Sempra Energy (NYSE:SRE), PPL Corporation (NYSE:PPL) and Edison International (NYSE:EIX).
The fund has a 12-month yield of 3.12% and an annual expense ratio at 0.15%, which is among the lowest of all ETFs.
Despite generally being considered an unorthodox investment for speculative long-term growth, this fund was up nearly 25% in 2014.
Since its all-time high at $49.78 made in January, XLU has pulled back 11%, but it may have found a bottom with a potential selling climax. The pullback took XLU to its 200-day moving average at $44.35 and a support line drawn from the June high at almost exactly the same price. This support line should attract both traders and long-term investors.
Buy XLU at the market price for a three-month trade to $49, which is more than 10% above current prices. Long-term investors should expect higher returns since the fund could break its all-time highs within a year while offering a solid dividend yield.
Although XLU is resting on a major support line that is expected to hold, buyers should enter a protective stop-loss order since a break under the 200-day moving average could inflict serious technical damage.
