"FUTY yields 2.47% and VPU yields 2.74%. Those figures trail the 10-year Treasury at 4.26% and the Fed funds upper bound."
"Both funds are heavily concentrated in a handful of names that dominate the U.S. power grid. NextEra Energy is the top holding in FUTY at 12.3%."
"These are regulated utilities, meaning their rates and returns are set by state commissions. That regulatory structure is what makes their dividends predictable over time."
"The funds also carry exposure to the newer side of the sector. Constellation Energy and Vistra Corp sit in the top ten of each fund."
High-yield savings accounts previously offered attractive rates above 5%, but the Fed funds rate has decreased to 3.75%, leading to lower savings account yields. In contrast, utility ETFs such as Fidelity MSCI Utilities ETF and Vanguard Utilities Index Fund provide cost-efficient exposure to the utilities sector with low expense ratios. These funds are concentrated in major utility companies, ensuring predictable dividends. Although their yields are lower than Treasuries, the narrowing gap makes them a viable option for income.
Read at 24/7 Wall St.
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