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Realty Income and similar income stocks now struggle to deliver inflation-beating returns, with dividend growth lagging recent price increases. In today's higher-rate, post-2020 inflationary environment, traditional income favorites offer little premium over bonds and limited inflation protection. My income safety test reveals that many beloved REITs and dividend stocks fail to preserve purchasing power, making them riskier for retirees.
To brace against market pullbacks, add some defensive stocks or funds to your mix. Defensive industries include healthcare, utilities, and consumer staples.
Markets remain under pressure as geopolitical and economic risks rise. Defensive ETFs could help investors navigate volatility without abandoning growth.
Texas regulators just froze data-center hookups, and one application fee cut AEP Ohio's pipeline by more than half overnight.
Launched on December 16, 1998, the State Street Utilities Select Sector SPDR ETF (XLU) is a passively managed exchange traded fund designed to provide a broad exposure to the Utilities - Broad segment of the equity market.
Worries about slowing growth and inflation may benefit defensive funds focusing on sectors like utilities, consumer staples and healthcare.
XLU gives you exposure to over 30 utilities, but the AI data-center boom is quietly concentrating inside just a handful of them, and owning the fund means paying for a lot of names that will miss the surge entirely.
Yields on high-quality income assets like SCHD and EPD have declined sharply as investor demand drives up prices, compressing risk premiums. Current market conditions offer little compensation for taking additional credit risk, with high-yield spreads near multi-year lows despite pockets of economic stress. Inflation risks and elevated government interest expenses make slow-growing, high-yield stocks and fixed income less attractive for long-term wealth preservation.