The stock market has been witnessing volatile swings due to the double whammy of red-hot inflation and the Fed’s interest rate hikes, coupled with geopolitical tensions. However, a series of positive economic data boosted investors’ confidence.
However, with inflation still at an elevated level, the Fed is expected to continue its aggressive rate hikes until it succeeds in bringing down inflation to the 2% target, thus increasing the risks of a recession. According to veteran economist Mohamed El-Erian, even though the labor market, consumer spending, and business earnings are strong; the risk of a recession “is getting higher and higher” due to the inflation beast.
Here are two non-cyclical ETFs, iShares U.S. Utilities ETF (IDU) and Invesco Dynamic Food & Beverage ETF (PBJ), for you to consider buying amid market uncertainties. These ETFs are trading under $100.
iShares U.S. Utilities ETF (IDU)
This ETF allocates its assets to a benchmark that measures the performance of the utilities sector of the U.S. equity market. IDU has a tilt towards large-cap firms, giving this product nice stability for its investors. With a strong yield, this ETF may be a perfect fit for investors looking for stable utilities exposure.
With $1.07 billion in assets under management (AUM), IDU’s top holdings include NextEra Energy, Inc. (NEE), with a 13.62% weighting in the fund, followed by Duke Energy Corporation (DUK) at 6.68%, and Southern Company (SO) at 6.54%. It currently has 47 holdings in total.
Over the past year, the ETF’s fund flows have come in at $105.81 million. In addition, its 0.41% expense ratio compares favorably to the 0.43% category average.
IDU’s annual dividend of $1.92 yields 1.72% on prevailing prices. It paid its last quarterly dividend of $0.41 on June 15, 2022. The ETF has gained 14.3% over the past six months to close the last trading session at $94.54.
IDU’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Invesco Dynamic Food & Beverage ETF (PBJ)
PBJ offers targeted exposure to the consumer sector, including a blend of both discretionary and staples. This ETF is linked to an index that utilizes quantitative analysis and stock screening to identify holdings. PBJ’s methodology results in a more expensive price tag but may have appeal to investors who believe the strategy can consistently generate alpha.
PBJ has $334.70 million in assets under management and a 0.63% expense ratio. Its net flows came in at $189.50 million over the past six months and $21.08 million over the past three months. Its top holdings include General Mills, Inc. (GIS) at 5.45% weighting in the fund, followed by Keurig Dr Pepper Inc. (KDP) at 5.40%, and Sysco Corporation (SYY) at 5.36%. It currently has 30 holdings in total.
PBJ’s annual dividend of $0.39 yields 0.98% on prevailing prices. It paid its last quarterly dividend of $0.12 on June 30, 2022. Its dividend payouts have increased at a 1.1% CAGR over the past three years.
PBJ gained 12.8% over the past year to close the last trading session at $47.58.
It is no surprise that PBJ has an overall A rating, which equates to Strong Buy in our proprietary rating system.
Want More Great Investing Ideas?
IDU shares were trading at $93.16 per share on Friday afternoon, down $1.38 (-1.46%). Year-to-date, IDU has gained 6.44%, versus a -13.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|IDU||Get Rating||Get Rating||Get Rating|
|PBJ||Get Rating||Get Rating||Get Rating|