Two Sector Income ETFs Outyielding the S&P 500 by More Than 2 Percent Heading Into a Possible Recession
Key takeaways
- XLP and XLU offer a simple, low-cost defensive tilt: Both ETFs invest exclusively in large, liquid, profitable S&P 500 based companies while providing above-market dividend yields and historically lower volatility.
- Defensive does not mean risk-free: Both sectors have historically experienced smaller drawdowns than the broader market during major bear markets, although they can still post substantial losses.
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Two Sector Income ETFs Outyielding the S&P 500 by More Than 2 Percent Heading Into a Possible Recession Tony Dong Fri, July 3, 2026 at 10:29 PM GMT+7 4 min read ^GSPC XLU XLP Quick Read Consumer staples and utilities benefit from inelastic demand: Households may cut discretionary spending during recessions, but they still need essentials like electricity, groceries, and household products, helping these sectors generate steadier earnings.
XLP and XLU offer a simple, low-cost defensive tilt: Both ETFs invest exclusively in large, liquid, profitable S&P 500 based companies while providing above-market dividend yields and historically lower volatility.
Defensive does not mean risk-free: Both sectors have historically experienced smaller drawdowns than the broader market during major bear markets, although they can still post substantial losses.