1/ Equal-weight Energy
2/ It’s Not Just the Large-Caps
3/ Relative to High Dividend Sectors
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1/ Equal-weight Energy
Equal-weight energy, after adjusting for dividends, is hovering near all-time highs. The sector is trading above an upward sloping 200-day moving average as slower moving technical indicators display no sign of a weakening trend.
Equal-weight Energy is outperforming market-cap weight Energy by over 3% year-to-date. This highlights broad participation of the sector. It isn’t just a handful of companies directing traffic in the index!
2/ It’s Not Just the Large-Caps
It’s not just Large-cap Energy that is keeping trend. Small-cap Energy is hanging near its 52-week highs, trading above an upward sloping 200-day moving average.
The sector formed new multi-year relative highs in late September. This is highlighted by the green line in the bottom pane. When the line is trending up (down), Small-Cap Energy is outperforming (underperforming) the Small-cap Index.
3/ Relative to High Dividend Sectors
The top 3 Large-cap sectors for dividend yield are Real Estate (3.90%), Utilities (3.52%) and Energy (3.45%). So how does Energy measure up compared to other high dividend yielding sectors? The answer is quite nicely!
The sector is at fresh multi-year relative highs compared to both Real Estate and Utilities. The Energy sector accounts for less than 4.5% of the S&P 500 Index. Many passive investors are severely underweight the sector. Something to think about when deciding on how best to compliment your core equity exposure!
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Originally posted 10th October 2023
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