Consumer Staples Select Sector SPDR ETF – XLP
Although I generally stick with VYM and SCHD when I buy more ETF shares, I decided to explore ETFs in the consumer staples sector. Part of the reason is that I have been watching the following stocks: PG, KO, PEP, WMT, COST, and CL. If you don’t recognize the ticker symbols, these are Procter & Gamble, Coca Cola, Pepsico, Walmart, Costco, and Colgate. These are all solid dividend-paying companies with long track records of increasing their dividends.
Therefore, I bought 100 shares of XLP as a diversification into these companies. One of the things I like about XLP is the focus. There are only 33 holdings, and the top ten make up 70% of the fund. In other words, in this case I like the top-heavy focus on the big consumer plays. When I looked at competing ETFs, they had a broader mix of investments. They also had a quite a bit of variation in holdings. For example, Vanguard’s VDC has 97 holdings, but their top ten are similar to XLP. For some investors, having more holdings might be attractive.
XLP has a sensible 0.12% expense ratio and a decent 2.48% yield. If you click on the DISTRIBUTIONS link below you can see the history. The PORTFOLIO link will show you the holdings at the SPDR web page.
I now hold 100 shares of XLP and might buy more.