Best Stocks to Buy in All 11 Market Sectors

Feb 6, 2024

In investing, a sector is a broad business category that a given company belongs to. Grouping companies, especially companies that offer stock to the public, by sector is a helpful way of sorting them into convenient groups.

There is no law or regulation that dictates the official names and criteria of sectors, but the financial industry has adopted and generally adheres to a specific set of sector groupings called the Global Industry Classification Standard, or GICS. The GICS was developed in 1999 in a joint effort between Standard & Poor’s Global and Morgan Stanley. It has been a reliable industry standard ever since.

Under the GICS there are 11 sectors. They are as follows:

Knowing a company’s sector is very useful when selecting stocks to buy and hold in an investment portfolio. Because different sectors can perform differently according to their own specific market and economic conditions, diversifying holdings among sectors can reduce the overall risk of a portfolio. In this way, sector diversification is an effective risk reduction strategy.

Unfortunately, with thousands of stocks grouped into 11 sectors, picking the right ones to buy can seem like a daunting task. Here’s a look at one top stock from each of the 11 different sectors:


Sector: Materials

Industry: Specialty chemicals

With manufacturing, distribution and retail outlets in 120 countries, SHW is a world leader in the development, production and distribution of paints, stains and coatings for retail and commercial customers.

SHW is a large-cap company with a market capitalization of $78 billion. The company reported revenues of $23 billion in revenue in fiscal 2023 and is currently paying an annual dividend of $2.42 a share.

In a Jan. 27 report, CFRA equity analyst Emily Nasseff Mitsch upgraded SHW from “hold” to “buy.” Nasseff Mitsch was encouraged by the fact that the company’s gross margins grew by 5.8% in the fourth quarter of last year while sales were essentially flat. She set a 12-month price target of $334, which represents upside of 8.6% from its Jan. 30 closing price.


Sector: Industrials

Industry: Heavy machinery

CAT is a well known heavy equipment manufacturer. The company is based in Irving, Texas, but has operations in every region of the world. It makes and sells mining equipment, large natural gas and diesel engines, turbines, diesel and electric locomotives, bulldozers, backhoes, dump trucks, industrial marine vessels, and many other kinds of vehicles and equipment.

The company also has a thriving financial division that provides a wide range of financing options to its network of dealers and end-use customers.

CAT will release its 2023 earnings on Feb. 5. Wall Street is expecting Caterpillar to report more than $67 billion in revenue for the year and is looking forward to solid earnings growth through 2026. Investors will also appreciate that CAT has a dividend yield of 1.7% and has raised its annual dividend payout every year for 27 years in a row.


Sector: Financials

Industry: Asset management

BEN was founded in New York City in 1947 and has grown to become one of the largest asset managers and custodian banks in the world. In December the company reported preliminary monthly assets under management (AUM) of $1.46 trillion, an increase of 3.5% over the previous month. The healthy increase in AUM was due to strong inflows of new assets and market appreciation.

BEN produced $7.8 billion in operating revenue in 2023 and boasts a market cap of $14 billion. Its high recurring revenue supports the current annualized dividend of $1.24 and its consistent dividend growth has earned the company a coveted spot on the Dividend Aristocrats list of companies who have increased their dividends for at least 25 years in a row.

The stock’s current dividend yield stands at a healthy 4.5%.


Sector: Energy

Industry: Midstream oil and gas

The next stock on the list is technically not a stock at all. ET is a master limited partnership, or MLP. MLPs are companies organized as partnerships rather than corporations. Their shares are called units, but they trade actively on exchanges just like stocks and ETFs.

ET is a $48 billion company that operates in the midstream industry of the energy sector. This means it’s involved in the transportation and storage of natural gas and oil. The company owns and operates an extensive network of pipelines that crisscrosses the continental U.S. as well as several energy storage facilities strategically located near major U.S. ports.

ET is one of the relatively few MLPs on the market that has secured an investment-grade credit rating from S&P. This is important because MLPs are considered to be income investments by many investors. In a press release dated Jan. 25, ET announced that it had increased its dividend 3.3% to an annualized $1.26 per share. At current price levels that equates to an impressive 8.7% yield.


Sector: Consumer discretionary

Industry: Home improvement retail

LOW began as a single-location hardware store in North Wilkesboro, North Carolina, back in 1921. Today the company is a home improvement powerhouse with more than 1,700 big box, warehouse-style stores and a market cap of $124 billion.

LOW sells building supplies, materials, tools, equipment, large and small home appliances and more to retail customers and building contractors throughout North America. Its large number of locations, huge variety of products and powerful marketing efforts allowed the company to generate $97 billion in revenue over the course of 2023, compared to $96 billion the year before.

The home improvement business is highly sensitive to fluctuations in interest rates and the relative strength of the economy. If mortgage rates remain high or if an economic slowdown emerges in the coming months, LOW could be adversely affected. But, based on the stock’s long-term performance, LOW still deserves recognition as a top stock.


Sector: Information technology

Industry: Communications equipment

CSCO makes equipment that makes the internet work. It designs, manufactures, distributes and services a wide variety of products for businesses in the communications and technology industry. Its main lines of business are networking equipment, internet protocol products, communications and collaboration equipment, digital security and applications. Over the last decade the company has also established itself as a leader in the emerging technology of cloud computing.

Geographically, the company operates in three segments. The Americas, which cover North America, Central America, South America and the Caribbean; EMEA, which stands for Europe, the Middle East and Africa; and APJC, which encompasses the Asian Pacific region, Japan and China.

With the incredible and continuing growth of the internet worldwide and the sustained push for the connectivity of consumer goods such as smart devices, it’s difficult to see the future of CSCO as anything but bright. The company has a market cap of $205 billion and took in $57 billion in revenue in fiscal 2023. Investors have every reason to expect those numbers to grow over the long term.


Sector: Communication services

Industry: Cable and satellite

Philadelphia-based CMCSA is much more than a regional cable TV provider. This diversified communications company is a $188 billion media and entertainment giant active all over the developed world.

CMCSA provides broadband, cable and satellite TV, and phone services to U.S. residential customers – under the Xfinity brand – through its cable communications division. Its media division runs the NBCUniversal suite of TV and streaming services, and its studios division produces movies and shows for the Universal Studios franchise. CMCSA also has a theme parks division that runs the five famous Universal Studios parks in America, Japan and China; last but not least, CMCSA’s Sky division runs the Sky Sports Network, which is one of the most popular entertainment companies in Europe.

With all that going on, it’s easy to see how the company was able to generate more than $121 billion in revenue in 2023. Many Wall Street pros are bullish on CMCSA, including equity analyst Jessica Reif Ehrlich of Bank of America Securities. Reif Ehrlich recently reiterated her “buy” rating on the company, and has a 12-month price target of $55 on the stock, an implied upside of nearly 18% from CMCSA’s Jan. 30 closing price of $46.65.


Sector: Health care

Industry: Health care equipment

ABT focuses its organizational attention on discovering, manufacturing and selling lifesaving health care products. It concentrates on pharmaceuticals, diagnostics, nutrition and medical devices and provides both name-brand and generic versions of its products.

ABT is a 136-year-old company based in Abbott Park, Illinois, but its drugs, supplements and medical equipment are sold all over the world. Its dedication to innovation in the medical field and the comprehensive diversification of its product offerings has propelled ABT above and beyond its peers in the sector.

Abbott Labs generated $40 billion in revenue in 2023 and Wall Street estimates that they will take in nearly $41 billion in 2024 and grow that to $45 billion in 2025.

Shares pay an annualized dividend of $2.20, which works out to a 1.9% dividend yield based on current price levels.


Sector: Consumer staples

Industry: Household products

CL has a market cap of $69 billion, generates about $20 billion a year in revenue and owns some of the most iconic brands in the household products industry. The company may be most famous for its soaps, detergents and oral hygiene products, but sales are growing quickly in the fields of home care and pet nutrition as well.

Most of the revenue the company earned in 2023 was generated in North America, but business was strong in Latin America, Europe, Asia and Africa as well.

While CL won’t break any records in terms of price appreciation, its growing dividend is certainly a selling point. In January 2014, CL was paying a quarterly dividend of 34 cents a share. Today its dividend rate is 48 cents per share per quarter. That’s an impressive increase of more than 41%.


Sector: Utilities

Industry: Natural gas

ATO is a regulated utility provider that distributes natural gas and provides ancillary services to residential and commercial customers in Colorado, Kansas, Kentucky, Louisiana, Mississippi, Tennessee, Texas and Virginia. The company also has a segment called the Atmos Pipeline-Texas Division which is doing very well and meaningfully contributing to revenue and earnings.

ATO consistently produces outsized revenue numbers for a firm with a $17 billion market cap. It reported $4 billion in revenue for both 2022 and 2023. As might be expected from a stock in the utilities sector, ATO pays a good, steady dividend and provides investors with a decent yield. Right now the dividend rate is set at $3.22 per share annually, which equates to a 2.8% yield.

The equity research division of Morgan Stanley has an “overweight” rating on the stock, and BofA Securities rates the stock a “buy.”


Sector: Real estate

Industry: Multifamily

ESS is an equity REIT with a market cap of $16 billion that concentrates its investment efforts in the multifamily part of the commercial real estate industry. The company has a geographic concentration in California and the Pacific Northwest but will expand eastward if the right opportunities present themselves.

Due to an acute residential housing shortage in the U.S. – especially in affordable and moderately priced housing – the multifamily business is booming. Developers and owners like ESS are seeing exceptional cash flow and significant capital appreciation from the apartment buildings they own.

ESS has not released its 2023 financials yet but Wall Street is expecting to see $1.66 billion in revenue when it reports on Feb. 7. Current shareholders are enjoying an annualized dividend of $9.24 per share, which comes out to a 3.9% yield.

Another consistent dividend grower, ESS has raised its dividend payout for 29 years in a row.

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