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When it comes to dividends, there are just certain sectors that investors seem to flock to. These include healthcare, consumer staples, and the biggest of them all: utilities.

And what’s not to like about utilities from a dividend investor standpoint? They have a steady demand profile, predictable fixed costs, and generally stable earnings. As a result, the sector is able to hand back much of their profits and cash flows to investors as juicy dividends. This fact has made them historically quite popular with retirees and other conservative investors.

However, we may be taking our love affair with utilities just a tad bit too far in the current market environment.

They’ve now become too expensive and are yielding too little based on long-term averages. Investors holding on to a bunch of these firms may be setting themselves up for failure.

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