Dip into Industrials with this ETF

The Industrial Select Sector SPDR Fund (NYSEARCA: XLI) is an exchange-traded fund (ETF) that tracks stocks in the Industrial Select Sector Index.

XLI is considered to be a broad sector measure of industrial stocks. The index includes companies in aerospace and defense, industrial conglomerates, marine, transportation infrastructure, machinery, road and rail, air freight and the logistics and commercial services and supplies industries. The fund selects from the S&P 500, with limited exposure to small- and mid-cap stocks, which only account for a small fraction of its holdings.

The Industrial Select Sector SPDR Fund’s (NYSEARCA: XLI) top 10 holdings include Boeing Co. (NYSE: BA), 8.31%; Honeywell International Inc. (NYSE: HON), 5.54%; Union Pacific Corp. (NYSE: UNP), 5.22%; United Technologies Corp. (NYSE: UTX), 4.61%; 3M Co. (NYSE: MMM), 4.36%; General Electric Co. (NYSE: GE), 3.99%; Lockheed Martin Corp. (NYSE: LMT), 3.90% Caterpillar Inc. (NYSE: CAT), 3.40%; United Parcel Services Inc. Class B (NYSE: UPS), 3.14%; and CSX Corp. (NASDAQ: CSX), 2.59%.

Another crucial factor in the industrial sector resides on the trade front, especially with China. After a supposed trade truce was reached between the United States and China, U.S. officials are traveling to China next week at the start of a six-week congressional recess to continue their lengthy trade negotiations.

The truce may have had a somewhat positive effect on XLI’s share price, as it’s up 1.51% in the past month. A recent ETF Channel analysis claims XLI’s share price has about a 7% upside and could reach as high as $83.92 in the next 12 months. XLI currently is up more than 21% year to date, as you can see in the chart below.

Chart courtesy of StockCharts.com

The Industrial Select Sector SPDR Fund (NYSEARCA: XLI) currently has a 1.99% yield that pays out a quarterly dividend of $0.337. Its ex-dividend date is Sept. 20.

As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.