"The fund is a concentrated bet on regulated power. As of late April 2026, electric utilities made up about 66% of the portfolio and multi-utilities another 26%, with top holdings led by NextEra Energy, Southern Company, and Constellation Energy."
"The classic utility model assumes flat-to-low electricity demand growth in developed economies. AI training clusters and hyperscale data centers are rewriting that assumption in real time."
"Utilities earn an allowed return on their rate base, pay out most of the earnings as dividends, and reinvest the rest into capital projects that grow the rate base."
"The most recent quarterly distribution was $0.31 in March 2026. XLU has paid quarterly dividends without interruption since 1999, with the long-term per-share payout climbing steadily for over a decade."
The Utilities Select Sector SPDR Fund (XLU) has experienced significant growth, up 20% over the past year and 9% year-to-date. It primarily invests in regulated electric utilities, with major holdings including NextEra Energy and Southern Company. Historically, utilities have provided steady dividends and reinvested earnings into capital projects. However, the rise of artificial intelligence and increased electricity demand from data centers is challenging traditional assumptions about utility growth, leading to a potential 'power demand super cycle' as forecasted by the International Energy Agency.
Read at 24/7 Wall St.
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