Close Menu
Invest Insider News
    Facebook X (Twitter) Instagram
    Sunday, August 9
    Facebook X (Twitter) Instagram Pinterest Vimeo
    Invest Insider News
    • Home
    • Bitcoin
    • Commodities
    • Finance
    • Investing
    • Property
    • Stock Market
    • Utilities
    Invest Insider News
    Home»Utilities»Is the Vanguard Utilities ETF the Smartest Income Play You Can Make Right Now?
    Utilities

    Is the Vanguard Utilities ETF the Smartest Income Play You Can Make Right Now?

    January 14, 20264 Mins Read


    This ETF sports a decent (though not jaw-dropping) yield, but it’s a smart income idea for other reasons.

    The utilities sector isn’t a haven for growth stocks. Still, utilities stocks have long been favored by investors seeking the alluring combination of above-average dividends and low volatility.

    To be fair to the defensive sector, there are occasions when it generates solid returns. Just look at the Vanguard Utilities ETF (VPU +1.18%). Last year, that exchange-traded fund (ETF) gained 16.5% as utilities ranked as the fourth-best sector in the S&P 500 (^GSPC +0.60%). The utilities ETF’s showing wasn’t far off the pace set by the Vanguard S&P 500 ETF (VOO +0.57%), which jumped 17.8% in 2025.

    Rows of power lines at sunset.

    This utilities ETF is a smart income idea with some AI exposure, too. Image source: Getty Images.

    A solid showing like that is a bonus, considering the impressive dividend yields found in the utilities sector by comparison. For its part, the Vanguard sector ETF boasts a 30-day SEC yield of 2.73%, which is more than double the yield of its S&P 500 counterpart.

    That’s one point confirming this utilities fund is a bright income idea, but there’s more to the story, pointing to the Vanguard ETF joining the ranks of the smartest income bets.

    This ETF is a surprising AI play

    For nearly the entire lifespan of the utilities sector, the group has been viewed as a stodgy fixed-income proxy. Still, thanks to the artificial intelligence (AI) boom, the sector’s growth proposition has been refreshed. No, investors won’t find “Magnificent Seven” stocks residing in this Vanguard sector ETF. Still, they will find an array of companies tethered to the soaring power demands created by AI’s acceleration.

    Hyperscalers are shelling out hundreds of billions of dollars annually to build energy-intensive data centers. That expansion is relevant to investors considering this utilities ETF, because Goldman Sachs forecasts a 2.5% compound annual growth rate (CAGR) in U.S. power consumption from 2023 through 2030, with a significant portion of that increase attributed to data centers.

    Some of the ETF’s holdings are already generating AI benefits. Constellation Energy, the fund’s second-largest component, inked a 20-year power purchase agreement (PPA) with Meta Platforms last June. The utility notched a similar accord with Microsoft in September 2024.

    Vanguard Utilities ETF Stock Quote

    Today’s Change

    (1.18%) $2.21

    Current Price

    $189.85

    Key Data Points

    Day’s Range

    $188.59 – $189.87

    52wk Range

    $154.00 – $203.15

    Volume

    7.6K

    Talen Energy, a smaller member of the ETF’s lineup, has a 20-year PPA with Amazon to power an Amazon Web Services (AWS) data center in Pennsylvania.

    Don’t forget NextEra Energy. The largest domestic utility and the most significant holding in the Vanguard ETF, at a weight of 11.5%, is about a month removed from announcing an expansion of a long-running partnership with Alphabet‘s Google Cloud unit.

    This ETF has other tailwinds

    The rub with the AI-induced enthusiasm permeating the utilities sector is that as share prices rallied, dividend yields declined. That scenario appears to diminish the sector’s income proposition, but payout growth remains compelling. Specific to this ETF, several of its 68 holdings are Dividend Kings, or stocks with annual dividend increase streaks of at least 50 years. That includes American States Water, which has a 71-year streak of dividend increases.

    Additionally, the $8.8 billion Vanguard ETF could have non-AI benefits in store for investors this year if the Federal Reserve continues lowering interest rates, which can boost the capital-intensive utilities sector.

    These perks are available for a modest annual fee of 0.09%, or $9 on a $10,000 investment.

    Todd Shriber has positions in Alphabet and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Constellation Energy, Goldman Sachs Group, Meta Platforms, Microsoft, NextEra Energy, and Vanguard S&P 500 ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
    Previous ArticleMSTR Stock Rises as BTC Hits $97K; Expert Predicts $455 Target
    Next Article Bitcoin Price Explodes Past $97,000 As Traders Eye $100,000

    Related Posts

    Utilities

    United Utilities in Top 100 apprenticeship employers

    August 8, 2026
    Utilities

    Utilities Down as Flight From Sector Continued — Utilities Roundup

    August 5, 2026
    Utilities

    Utilities threaten action if lawmakers fail to cut their wildfire liability risk

    August 5, 2026
    Leave A Reply Cancel Reply

    Top Posts

    How is the UK Commercial Property Market Performing?

    December 31, 2000

    How much are they in different states across the US?

    December 31, 2000

    A Guide To Becoming A Property Developer

    December 31, 2000
    Stay In Touch
    • Facebook
    • YouTube
    • TikTok
    • WhatsApp
    • Twitter
    • Instagram
    Latest Reviews
    Property

    Manor ISD proposition could lower property taxes

    August 20, 2024
    Utilities

    Gavin Newsom calls on SoCal utilities to bury their power lines

    March 3, 2025
    Property

    Home Sales in China’s Wuhan Jump Nearly 15% in First Half as Property Market Heats Up

    July 8, 2025
    What's Hot

    USDT Outflows Accelerate as Bitcoin Recovery Struggles

    August 4, 2026

    Dow, S&P 500, Nasdaq Rise; Nvidia, MongoDB, Okta, Echostar, More Movers; Trump Fed Concerns

    August 28, 2025

    La société d’analyse partage une prédiction optimiste majeure pour Ethereum: «Dans un scénario où Bitcoin atteint 300 000 $, ETH…»

    May 12, 2025
    Most Popular

    Essential Utilities Second Quarter 2025 Earnings: Beats Expectations

    August 2, 2025

    Le Bitcoin peut-il profiter des taxes de Trump ?

    April 13, 2025

    Stock and Share Market News, Economy and Finance News, Sensex, Nifty, Global Market, NSE, BSE Live IPO News

    July 12, 2024
    Editor's Picks

    BTC tests $80,000 as Asia’s bid fades and Hong Kong AI IPOs surge

    May 4, 2026

    Unknown Bitcoin OG Sells Coins To Buy $806,000,000 Worth of Ethereum (ETH): Lookonchain

    August 25, 2025

    Stocks Climb as Earnings Strength Offsets Trade Risks and Shutdown Fears

    January 26, 2026
    Facebook X (Twitter) Instagram Pinterest Vimeo
    • Get In Touch
    • Privacy Policy
    • Terms and Conditions
    © 2026 Invest Insider News

    Type above and press Enter to search. Press Esc to cancel.