Warning Signs: The Time to Beware Is NowAs we can plainly see from the chart above, the "safe and conservative" mystique of utilities can meld into dramatic disappointment, as was experienced by XLU investors in the summer of 2011. Are we heading for yet another unexpected swan dive for the utility sector? One clue would be to compare how the XLU performs in comparison with a broader market index like the S&P 500. Below is a comparison chart of the XLU vs. the SPDR S&P 500 ETF ( SPY).
The 12-month average price target set by analysts for COP is almost $65. That's 18% higher than its current price, and if this comes to pass and you add in the almost 5% dividend yield, it may be reasonable to anticipate a total-return of around 23%.For diversification's sake, and if you like the idea of buying low while still earning a generous dividend, consider a resource-based royalty trust like Cross Timbers ( CRT). With its current 7% yield (paid monthly) and trading close to the bottom of its 52-week range, CRT is worth looking at, especially when you consider that it has no debt and boasts a trailing-12-month Return on Assets of 74% and a magnificent 131% Return on Equity. Cross Timbers Royalty Trust