Recent run-ups in tech stock valuations and all-time highs in the S&P 500 index have led some investors to worry that growth stocks are overpriced.
Buying utility stocks and utility exchange-traded funds (ETFs) can be a good move for some situations and strategies — like if you want to hedge against a possible tech downturn or future recession
Utility stocks tend to earn steady income and pay above-average dividends. These companies have also benefited from rising demand for electricity related to the artificial intelligence (AI) data center build-out. But utilities have a few risks and downsides.
They’re not the right fit for every investor. The Vanguard Utilities ETF (NYSEMKT: VPU) is a low-cost way to invest in dozens of utility companies that distribute electricity, gas, water, or operate as independent power producers. This fund has underperformed the S&P 500 for the past five years.