Is the Vanguard Utilities ETF the Smartest Income Play You Can Make Right Now?

By David Dierking – Feb 23, 2026 at 3:15PM ESTKey PointsFor decades, utilities have been used primarily as an equity income vehicle.The artificial intelligence (AI) buildout helps turn utilities stocks into more of a growth and income story today.That combination of above-average yield with a compelling growth story makes this sector one of the smartest income plays today.We’re bullish on these 10 stocks ›NYSEMKT: VPUVanguard Utilities ETFToday's Changeangle-down(0.69%) $1.38Current Price$201.69Price as of February 23, 2026 at 4:00 PM ETThe artificial intelligence (AI) revolution makes the utilities sector much more than just an income play. It adds a real growth story to the narrative.In many cases, smart income plays offer limited share price upside. Bond yields have been stuck within a range for several months. That's been good for the predictability of income, but there hasn't been much additional total return potential outside of the income component. The dividend yield on the S&P 500 is down to just a hair over 1%. You can get a better yield targeting certain defensive and cyclical sectors, but the overall performance of those areas of the market has been mixed. There is, however, one area of the market that offers an intriguing mix of income and growth. And it's probably one of the last places you'd expect to find it: utilities. I'm about to make the case for why the Vanguard Utilities ETF (VPU +0.69%) could be one of the smartest income plays today. Image source: Getty Images. Utilities offer a durable, high-yield income profile Utilities have historically been among the highest-yielding sectors of the stock market, as evidenced by the Vanguard Utilities ETF's current yield of 2.7%. Better yet, that yield has been durable over time. ExpandNYSEMKT: VPUVanguard Utilities ETFToday's Change(0.69%) $1.38Current Price$201.69Key Data PointsDay's Range$200.38 - $202.9252wk Range$154.00 - $203.50Volume242K It's backed by a sector whose primary products are constantly in demand and resilient to economic swings. Balance sheet health is sensitive to interest rates (utilities tend to have high debt loads), but an overall defensive profile and steady revenue streams help make utilities one of the better income producers in the market. But utilities have traditionally been mostly income with little growth. The artificial intelligence (AI) revolution is helping to change that perception. The data center/electrification story offers unusual growth upside AI takes a lot of power to operate. Data centers are popping up everywhere to handle demand, but they're still struggling to keep up. Being only in the early innings of the AI build-out, it's reasonable to think the power demand is going to continue rising meaningfully for the foreseeable future. S&P Global expects data center power demand to have risen by 22% in 2025 and triple by 2030. Whether utilities can keep up with AI-related demand is in question. Companies will likely need to spend heavily on infrastructure over the next several years to keep up. That level of capital spending could impact earnings and the potential for share price appreciation, but it's the strongest growth catalyst the sector has seen in years. Overall, investing in utilities is becoming more of a growth-and-income play than a pure defensive income opportunity. The current yield is high enough to satisfy income seekers, but the growth story adds another layer of potential growth on top. That makes the Vanguard Utilities ETF a smart play to capture both opportunities.Read NextJan 14, 2026 •By Todd ShriberIs the Vanguard Utilities ETF the Smartest Income Play You Can Make Right Now?Nov 16, 2025 •By Courtney CarlsenIs the Vanguard Utilities ETF the Smartest Investment You Can Make Today?Aug 30, 2025 •By Daniel FoelberThis ETF is Crushing the S&P 500. Here's Why It's a Simple Way to Invest in AI While Generating Passive Income from High-Yield Stocks.Aug 26, 2025 •By Reuben Gregg BrewerWhy the AI Revolution Is Poised to Reshape Your PortfolioAug 13, 2025 •By Reuben Gregg Brewer3 No-Brainer High-Yield Utility Stocks to Buy With $500 Right NowJun 26, 2025 •By Reuben Gregg BrewerIs Vanguard Utilities Index Fund ETF the Smartest Investment You Can Make Today?Stocks MentionedVanguard Utilities ETFNYSEMKT: VPU$201.69 (+0.69%) $+1.38S&P 500 IndexSNPINDEX: ^GSPC$6837.75 (1.04%) $71.76S&P GlobalNYSE: SPGI$404.48 (3.11%) $13.00*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.