I Predicted This ETF Was a Buy for Passive Income, and It's Already Up 13% in 2026. Is There More Room to Run?

Last November, I called retired the State Street Consumer Staples Select Sector SPDR ETF (NYSEMKT: XLP) arsenic my apical high-yield exchange-traded money (ETF) to bargain for passive income. My concern thesis centered astir the fund's prime value-stock holdings and reliable passive income.

I did not expect the ETF to already beryllium up 13.2% successful 2026 compared to a specified 1.3% summation successful the S&P 500. Here's wherefore the seemingly boring user staples assemblage is scorching hot, and wherefore the Consumer Staples SPDR ETF remains a bargain for broad-based vulnerability to it.

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Top holdings successful the Consumer Staples Select Sector SPDR ETF see Walmart, Costco Wholesale, Procter & Gamble, and Coca-Cola. These aren't the benignant of stocks that investors expect to execute breakneck maturation oregon marque pioneering strides successful artificial quality (AI). But they tin beryllium relied connected to nutrient beardown results nary substance what the system is doing, and galore specified companies wage unchangeable and increasing dividends.

You whitethorn person heard the word Dividend King, which refers to companies that person paid and raised their dividends annually for astatine slightest 50 consecutive years -- names similar P&G, Coke, PepsiCo, and Colgate-Palmolive. Consumer staples predominate the group, making up 15 of the 57 Dividend Kings.

But the user staples assemblage has been nether unit owed to pullbacks successful lawsuit spending, and galore companies are struggling to walk on higher costs done terms increases. In fact, user staples was the worst-performing banal marketplace assemblage successful 2025. This year, it is the third-best-performing sector.

Years of underperformance comparative to the S&P 500 and a discounted valuation aren't adjacent the superior reasons the user staples assemblage is exploding higher successful 2026. Rather, it has much to bash with shifting sentiment successful growth-focused sectors similar tech, communications, and user discretionary. As such, the best-performing sectors successful 2026 person been value- and income-focused ones similar energy, materials, user staples, and industrials.

As an example, Amazon and Microsoft sold disconnected aft their latest net reports and are down large twelvemonth to date.

Amazon Web Services and Microsoft Azure are the 2 biggest unreality infrastructure work providers successful the world. Amazon announced $200 cardinal successful 2026 superior expenditures (capex) -- a batch of which is going toward AI and unreality infrastructure.