A Cheap ETF for Income-Oriented Investors Looking for Safety
If you are worried about a market crash or just want to add some stability to your portfolio, then the Vanguard Utilities Index Fund ETF Shares (NYSEArca:VPU) could be a great option for you. The fund is made up nearly entirely of utility companies.
Its largest holding is NextEra Energy, which makes up 16% of the fund's total assets. Duke Energy (NYSE:DUK), Southern Company (NYSE:SO), and Dominion Energy (NYSE:D) all make up at least 6% each. But beyond that, no other stock accounts for even 5% of the ETF's assets.
The average stock in the fund trades at a price-to-earnings multiple of under 22.
Contrast that with the typical stock within the S&P 500 where that multiple is above 27 and it is easy to see why there is some great value here. This ETF also pays a yield of 3.2%, which, on a $25,000 investment could generate $800 per year in dividends.
Read:
Plans for Net Zero Carbon Emissions Fueling Hydrogen Market Growth
These are Some of the Top Companies Jumping on the Bitcoin Bandwagon
The Plant Based Market Revolution Could Sprout to $85 Billion By 2030
Cryptocurrency Rising as Corporate Mainstream Acceptance and Digital Mining Ramps Up
Some of The Top Psychedelic Stocks Showing Significant Progress
With the Pet Industry Howling, These Companies May Be Some of the Best in Breed
For Millions All Over the World, the Future May be Plant-Based
The Race to Prove Psychedelics Can Help Resolve Mental Health Issues Has Just Begun
Psychedelics May Hold Significant Promise for Mental Health Care Treatment
Millions of Consumers May Need EMR Protection in the Digital Age
In the past year, the fund hasn't done too well, falling more than 13% in value.
However, as investors turn to safety amid rising valuations, utility stocks could soon become much more attractive buys and it wouldn't be surprising for the fund to rise in value and recover before the year is over.
The ETF charges a modest net expense ratio of 0.1% and could be well worth the safety net that it offers. It is one of the better buys out there right now for risk-averse investors and this is an investment you can hold in your portfolio for many years.