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 Emerson Electric (EMR), 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 Johnson Controls (JCI), 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 Uranium Energy (UEC) and Southerwestern Energy (SWN), a gas producer. Holdings that make more efficient equipment include A.O. Smith (AOS), which sells water heaters, and General Cable (BGC), a maker of high-voltage transmission cables.
Companies that help to reduce emissions include Tata Motors (TTM), a maker of small cars, and ADA-ES (ADES), 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. Follow @StanLuxenberg This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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