Blue chips in the portfolio have helped to stabilize the PowerShares ETF's results during periods when many energy stocks were sinking. Among the steadiest blue-chips in the portfolio is
(EMR - Get Report)
, which has a market capitalization of $41 billion. Known for building efficient motors and measuring equipment, Emerson has long reported high returns on equity. The company has increased its dividend annually for years. Another large-cap holding is
(JCI - Get Report)
, with a market capitalization of $21 billion. A maker of energy control systems for buildings and hybrid vehicles, Johnson pays a 2.5% dividend.
The portfolio also includes producers of cleaner fuels, such as
, a gas producer. Holdings that make more efficient equipment include
, which sells water heaters, and
, a maker of high-voltage transmission cables.
Companies that help to reduce emissions include
, a maker of small cars, and
, which helps power producers burn coal more cleanly.
The PowerShares fund tends to roughly track oil prices. As energy costs rise, investors bid up the shares of companies that stand to benefit from cost-containment efforts. But the PowerShares fund has outperformed typical energy funds, which focus on big oil companies. During the past five years, the PowerShares ETF returned 1.7% annually, compared to -1.7% for the average energy mutual fund tracked by Morningstar.
At the time of publication the author held no positions in any of the stocks mentioned.
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.