UTIL provides direct exposure to TSX-listed utility, pipeline, and telecom businesses that pay dividends
Horizons ETFs has announced the launch of the Horizons Canadian Utility Services High Dividend Index, which is now trading under the ticker symbol "UTIL" on the Toronto Stock Exchange.
It offers investors Canadian exposure to the three main utility services industry sectors—utilities, pipelines, and telecommunications. These sectors have historically served as defensive businesses, providing investors with a fair amount of security and reliable dividend payments even during times of market turmoil.
"With rising inflation, investors are increasingly looking towards dividend and yield-focused strategies to outpace costs and stay ahead in their portfolios. However, with the spectre of a potential recession on the horizon, investors are also looking for these income-producing mandates to provide some protection from a broader market decline," said Steve Hawkins, President and CEO of Horizons ETFs.
UTIL aims to duplicate, net of costs, the performance of the Solactive Canadian Utility Services High Dividend Index, which is designed to give investors exposure to TSX-listed utility services businesses with strong dividend yields.
A business will be categorized as predominantly operating in one of the index categories "Utilities," "Pipelines," or "Telecommunications" to be eligible for inclusion in the index. The index may include small, medium, or large-cap issuers that achieve a minimum yield threshold. The index is also rebalanced to equal weight on a semi-annual basis.
"Historically, the utility services sector has offered a higher level of dividend income than the broader S&P/TSX Composite," Hawkins said. “Not only do we think this expansion beyond traditional utilities improves diversification for investors, but it might also improve the income generated by the ETF."