The 3 Best Sectors For Long-Term Earnings

There are so many different sectors to choose from when it comes to investing, so we take a look at the top 3 stocks for long-term returns.

Oct. 23, 2019

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1. Tech Sector

Often considered to be the most glamorous sector in investing, technology boasts some of the biggest company names in the world such as Apple (NASDAQ: AAPL), Microsoft (NASDAQ: MSFT), and Amazon (NASDAQ: AMZN). Aside from these behemoths, technology has thousands of other, smaller companies, many with huge profit margins operating behind the scenes – had you ever heard of Shopify before they went public?

In terms of returns on investments, technology is not always going to be the sure thing one might think, as the past decade has shown it to be a temperamental area in general. In fact, the sector offered the highest returns of all ranked market sectors at 50% in 2009 and 34% in 2017, while also underperforming the average of all sectors in 2008, 2010, 2011 and 2013. 

What makes tech such an exciting investment is the sheer diversity and constant growth, with areas including Artificial Intelligence, smartphones, SaaS and countless other avenues. One need only look at the top-performing stocks this century, and 4 of the top 10 are in tech, including Apple.

2. Health Sector

The health sector is an area that has a history of volatility – particularly in the pharmaceutical industry – and many investors may avoid it due to the advanced knowledge required to understand what many of the companies are doing. U.S. health spending represents a huge opportunity for investors, however, totaling $3.7 trillion in 2018 alone.

Much like the tech sector, the health sector is ever-growing and limitless due to the increased capabilities of technology. Advanced medical technology can range from improved x-ray imagery to enhanced surgical tools. Somewhat symbiotic with the tech sector as a whole, tech and health can both become solid long term investments due to innovation. They have also been known to work together for the betterment of one another. 

The pharmaceutical industry alone is worth more than $500 billion in the U.S., and some of the biggest corporations in the world belong to this group. One example of the kind of returns one can expect from healthcare investments is Gilead Sciences (NASDAQ: GILD), which has seen a 47% increase in dividend payouts since 2015. 

One area in the health sector that represents the potential for massive growth is in health data. Ever-increasing and aging populations and an increase in chronic diseases requires the health sector to amass and store massive amounts of health data. Electronic health record companies are on the rise, with big tech firms such as Amazon and Apple getting in on the action. 

Global health care expenditures are expected to continue to rise as spending is projected to increase at an annual rate of 5.4% between 2017-2022, from USD $7.724 trillion to USD $10.059 trillion, so now may be a great time to get in on health.

3. Financial Sector

We know what you’re thinking about finance – yawn – but as boring as the financial sector might sound for investing, it is also a tried and tested formula down the years. Many equate the entire sector with Wall Street and big banks, but there is a lot more to it than that. It is actually one of the most important factors behind a healthy economy.

One might think of the ‘Great Recession’ of 2008, and believe that finance is a risky investment. There is some truth to this, yet it is no more risky than any investment, including tech or healthcare. If you look at the biggest companies in finance, you will see a large portion of them dominate the S&P 500, including American Express (NYSE: AXP), Bank of America (NYSE: BAC), Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) and more. 

With the financial services market expected to reach a value of roughly $27 trillion by 2022, this forecast growth of 6% represents another strengthened sector that may be worth the investment. There have also been several disruptors to the industry in recent years such as PayPal (NASDAQ: PYPL), and Visa (NYSE: V). With technology becoming more advanced and an explosion of alternative payment tech hitting the markets, there is still plenty of room for more disruptors.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Amazon, American Express, Apple, Microsoft, PayPal, and Visa. Read our full disclosure policy here.