While utility stocks have taken it on the chin lately with the Federal Reserve starting to raise rates, the reality is, they still make sense for retirement investors.
Utility stocks are often a go-to asset class for those in retirement, as the sector provides plenty of big income opportunities. After all, consumers, businesses and municipalities still need to power their operations and cool their homes, even in tough economic times. Water still needs to flow, and electricity hums through power lines. Ultimately, utilities’ stable cash flows and recession-resistant nature make them ideal candidates for investing during retirement.
But here’s the real kicker for utility stocks.
The Fed is raising rates, and that has caused them to flounder. But the sector has historically realized faster dividend growth than the pace of interest rate increases and inflation. For retirement investors still looking for stability of income, utility stocks could offer a unique value today — especially when you factor in the potential for higher income later on.
With that in mind, here are three ways to play utility stocks — one stock, one ETF and one mutual fund.