Diversifying by Sector: 20 High-Quality Attractive Dividend Growth Stocks Rated A- Or Better (Part 2


This current series of articles could be summarized as a review of ways to construct and diversify a common stock portfolio. In part 1 found here I discussed various viewpoints on how many stocks a portfolio should hold. In Part 2A found here I presented and discussed Peter Lynch’s 6 general categories of stocks. In this part 2B I will continue reviewing diversification strategies by evaluating the potential benefits of portfolio construction across the 11 sectors.

Therefore, the best place to start is with a review of the 11 major sectors. (Note: REITs used to be included in the financial sector but were recently given their own sector status.) However, in addition to the 11 major sectors, there are numerous subsectors included in each. Consequently, a portfolio can technically be over-weighted in a broad sector while still being more broadly diversified over various subsectors. To provide the full impact of how broadly diversified each major sector is, I offer the following list of the 11 major sectors plus all the subsectors in each:


  • Oil & Gas Drilling
  • Oil & Gas Equipment & Service
  • Integrated Oil & Gas
  • Oil & Gas Exploration & Production
  • Oil & Gas Refining & Marketing
  • Oil & Gas Storage & Transportation
  • Coal & Consumable Fuels


  • Commodity Chemicals
  • Diversified Chemicals
  • Fertilizers & Agriculture
  • Industrial Gases
  • Specialty Chemicals
  • Construction Materials
  • Metal & Glass Container
  • Paper Packaging
  • Aluminum
  • Diversified Metals & Minerals
  • Gold
  • Precious Metals & Minerals
  • Silver
  • Steel
  • Forest Products
  • Paper Products