Energy ETFs Heating Up: 3 Plays Worth Your Attention

Energy had a monster 2022 — the XLE ETF rocketed 64.3% while the S&P 500 tanked 19.6%. Sounds ancient history? Not quite. Here’s why the sector still has gas in the tank:

Why Now? Even after last year’s rally, energy is still a tiny slice of the S&P 500 pie. Stock valuations remain below market average, and many energy companies are drowning shareholders in dividends and buybacks. Oil prices can flip on a dime — remember how fast things moved in 2022?

The Play-by-Play:

XLE (Energy Select Sector SPDR) — The heavyweight. $40B+ in assets, basically the energy sector’s poster child. Top dogs ExxonMobil (24.2% of fund) and Chevron (18.7%) dominate. The catch: top 10 holdings are 74.5% of the fund, so you’re betting on blue chips. Dividend yield 3.75%, expense ratio 0.10%. Analysts say 22.7% upside ahead.

VDE (Vanguard Energy ETF) — Vanguard’s answer. More spread out (114 holdings vs XLE’s 25), so less concentrated risk. Same dividend yield (3.7%), same dirt-cheap fees (0.10%). Same top 10 stocks as XLE, just different weightings. Analysts pricing in 25.85% upside.

XOP (SPDR S&P Oil & Gas Exploration) — The wildcatter’s pick. Lighter on mega-caps, heavier on independent explorers and mid-size refiners. More diversified (61 holdings, top 10 only 24.2% of fund). Higher fees (0.35%), lower yields (2.5%), but analysts see 36.9% upside potential.

The Verdict: XLE and VDE are your steady plays — fat dividends, skinny fees, big names. XOP is the spicier bet if you like smaller, riskier energy names. Energy’s not the flash-in-the-pan story anymore — it’s looking like a real part of the portfolio now.