Utility stocks have had a great year, but it isn’t too late to get into this sector at a reasonable valuation and lock in a 7% yield. Of course, you could always just buy the Utilities SPDR (XLU) and wait for the rising tide to drive this indexing fund higher. But there are two big problems with this approach. First, the ETF is up over 15% year-to-date thanks to the run-up in utilities. The other problem: this fund yields just 3.2%. Now that isn’t bad compared to the S&P 500, but that’s less than 1 percentage point above the more stable and lower risk SPDR S&P Dividend ETF (SDY).
If we’re going to get into utilities after they’ve run up 15%, we’re going to have to be more selective to get a better yield and less risk. So where can we go? Let’s take a look: BlackRock Utility & Infrastructure Trust (BUI), CorEnergy Infrastructure Trust (CORR) and InfraREIT (HIFR). Admittedly, making a portfolio of these three stocks seems riskier than just buying and holding XLU.
Source: InvestorPlace
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