This ETF Will Benefit From Americans' Higher Energy Bills

Americans’ energy bills have increased by 13% since President Donald Trump took office in January 2025. And while that's bad news for households with budgets already stretched thin, for those engaged in sector investing, it could be a boon as we head into the new year. 

Unlike suffering consumer discretionary stocks, utilities—including heat and electricity—are essentials for every American home, making those elevated rates a revenue booster for companies operating in that sector. 

For investors looking to gain broad exposure, the First Trust Utilities AlphaDEX Fund (NYSEARCA: FXU) might be just the ticket.

Why America’s Utility Bills Are Surging

The utilities sector is limping into the new year, having posted over a 3% loss over the past month—the worst performance among all 11 sectors in the S&P 500. But when the calendar turns to 2026, that corner of the market might begin to enjoy long-term tailwinds.

That’s because Americans are facing substantially higher electric bills amid a backdrop of lagging renewable energy production, higher input prices for fossil fuel-powered power generation, and escalating AI electricity demand. 

As the Trump administration continues its attempts to revive the fossil fuel industry, permitting for renewable energy projects is drying up. In turn, those efforts have resulted in the delay or cancellation of nearly 25,000 megawatts of planned electric power production. 

Put another way, the White House has effectively prevented the equivalent of enough electricity generation to power 13.17 million homes, according to a report released by Climate Power earlier in December.

Climate Power also found that prices for natural gas are up 98% since Trump took office. That poses a problem, as the U.S. Energy Information Administration’s data shows that natural gas accounts for more than 43% of all U.S. electricity generation by power source. 

Meanwhile, the growing demand for AI data centers is driving rates higher nationwide. That has been well-documented alongside some AI stocks posting triple-digit gains in 2025. At the same time, some utility stocks have been capitalizing on the trend as demand for electricity skyrockets. 

That’s good news for buy-and-hold investors. AI data centers currently account for 4.4% of all U.S. electricity consumption. However, by 2030, that figure is expected to grow to an estimated 12% to 20%. 

At the same time, gas and electric utilities have raised or sought to increase bills by more than $85 billion, resulting in Americans in 49 out of 50 states already facing rising utility costs.

Until the data centers servicing AI tech companies are independently powered, that growing electric consumption is likely to help the utilities sector produce notably larger gains, which could be a benefit for shareholders of the First Trust Utilities AlphaDEX Fund.   

Diving Into the FXU

While investors often turn to large-cap utility companies like NextEra Energy (NYSE: NEE), Constellation Energy (NASDAQ:CEG), and Southern Company (NYSE: SO), or sector ETFs that hold them, the First Trust Utilities AlphaDEX Fund operates a little differently. 

The ETF has a bent on higher upside potential via the inclusion of more companies and tracks the StrataQuant Utilities Index, which selects its holdings from the Russell 1000—an index that holds twice as many companies as the S&P 500. 

The index also ranks stocks by growth factors, including three-, six-, and 12-month price appreciation, one-year sales growth, and value factors including cash flow, return on assets, and more. 

The result is a portfolio of high-growth potential utility stocks with balanced allocations, a manageable 0.63% expense ratio, and a strong dividend of $1.03 per share. 

Those balanced allocations translate to none of its top holdings having a weighting above 5% at the time of writing. UGI Corporation (NYSE: UGI), currently the fund’s top position, is weighted at 4.83%, while American Electric Power (NASDAQ: AEP), its 10th largest holding, is weighted at  3.42%. 

Like the index it tracks, this approach results in lower concentration risk. That’s something that has materialized over the past year. While the aforementioned XLU’s S&P 500 utilities sector focus has resulted in an 11.35% year-to-date (YTD) gain, trailing the market in 2025, the FXU has gained 17.65% YTD and outperformed both the S&P 500 and the Russell 1000. 

What Wall Street Thinks About the FXU

While the fund isn’t illiquid, the FXU has average daily trading volume of just 256,355 shares compared to 22.32 million shares for the XLU. 

But that hasn’t deterred institutional ownership from including the ETF in its holdings.

Over the past 12 months, those investors have pumped more than $610 million into the fund while outflows were limited to just $183 million. Meanwhile, current short interest stands at an insignificant 0.25% of the FXU’s float. 

Because ETFs aren’t “rated” the same way as single stocks, what matters is sentiment toward the companies inside the fund. Based on 329 analyst ratings of the companies that comprise the ETF’s portfolio, the fund receives a Moderate Buy rating. 

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

The article "This ETF Will Benefit From Americans' Higher Energy Bills" first appeared on MarketBeat.