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Strategies & Market Trends : Dividend investing for retirement
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From: Jacob Snyder6/12/2021 6:33:04 PM
4 Recommendations

Recommended By
bull_dozer
INCOGNIT0$
KEN2CWL
Kip S

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XLU: utility ETF:
3% div yield
2/3 of 28 stocks in this ETF are electricity companies. The rest are partially in electricity, so this can be considered a electric utility ETF.

PRO:
1. very long-term: environmentalist consensus: to fix global warming, energy sources must be all-electric. Your car will be powered by the electric utility, not an oil company. Your furnace and stove will be electric. Therefore, electric utilities will be a larger and required part of the economy in the future. Companies and governments are gradually accommodating themselves to this consensus.

2. long-term: Governments will not let utilities go bankrupt. Nobody will allow the lights shut off, or the water turned off. So, the debts and continued operation of utilities are government guaranteed. These are heavily regulated companies.

3. medium-term: XLU is on an uptrend, and has ignored every possible negative.
4. short-term: this is a random variable, which neither I nor you can predict.

Con:

1. high debt. Their expenses will increase if interest rates increase.
2. inflation will increase interest rates.
3. falling electricity demand. During the pandemic, office buildings closed, so utilities saw revenues fall.
4. Asset bubble: today, everything is overvalued.
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