The U.S. allocates more funds for defense expenditure each year than a group of most of other developed countries.Despite the fiscal cliff and any other political theater there is always enough funds available for the Pentagon.

The following chart from Peterson Foundation via slate shows the size of U.S. defense budget relative to other countries:

Source: There’s Always Money in the Defense Budget, The Slate

The major beneficiaries of this huge defense expenditure year-after-year are the defense contractors that sell all the cool toys the Pentagon uses on a daily basis. This is one strong reason to invest in defense stocks at any time.

In addition, the U.S. is also the world’s largest exporter of weapons and other defense equipment.This also benefits the defense contractors as they are eagerly able to sell expensive products to friendly countries. It should be noted that weapons trade is one of the very trade sectors that is not taxed by most national governments.

Here is a chart showing the performance of S&P’500 Defense and Aerospace Index since 2001:

Source: Is It Time to Play Defense on Defense-Company Stocks?, The Wall Street Journal

Most of the large defense companies have long-term contracts with the Pentagon and other Federal agencies and generally have stable revenues. All these factors make investments in this sector a wise strategy.

The top 10 defense and aerospace companies based on market capitalization and trading on the NYSE are listed below:

1.Company: United Technologies Corporation (UTX)
Current Dividend Yield: 2.49%

2.Company:The Boeing Company (BA)
Current Dividend Yield: 2.52%

3.Company:Lockheed Martin Corporation (LMT)
Current Dividend Yield: 4.89%

4.Company:General Dynamics Corporation (GD)
Current Dividend Yield: 2.89%

5.Company: Raytheon Company (RTN)
Current Dividend Yield: 3.44%

6.Company:Northrop Grumman Corporation (NOC)
Current Dividend Yield: 3.26%

7.Company:Rockwell Collins, Inc.(COL)
Current Dividend Yield: 2.01%

8.Company:L-3 Communications Holdings, Inc.(LLL)
Current Dividend Yield:

Note: Dividend yields noted are as of Jan 16, 2013

Disclosure: No Positions

The oil industry is made up of companies operating in various fields. For example, companies specialize in one or many of the following areas: drilling, exploration, project management, transportation, logistics, equipment, information solutions, marketing, refining, etc.  Among these areas, the oil well services and equipment providers is one area which offers excellent investment opportunities. This is because without these firms the bigger and giant integrated energy companies cannot operate efficiently and effectively. In fact, most of the oil firms sub-contract the services and rent/lease equipment from these highly sophisticated firms.

Five of the largest Oil Well Services and Equipment Providers by Market Cap listed on the NYSE are shown below:

1.Company: Schlumberger NV (SLB)
Current Dividend Yield: 1.49%

2.Company:Halliburton Co (HAL)
Current Dividend Yield: 0.98%

3.Company:National Oilwell Varco Inc (NOV)
Current Dividend Yield: 0.73%

4.Company: Transocean LTD (RIG)
Current Dividend Yield: No regular Dividends

5.Company:Baker Hughes Incorporated (BHI)
Current Dividend Yield: 1.40%

By far Houston,TX-based Schlumberger is the world’s largest company in this field with over 110,000 employees and revenues of over $42.0 billion last year.

Note: Dividend yields noted are as of Jan XX, 2013

Disclosure: No Positions

One of the sectors that investors may want to consider gaining exposure to is the chemical sector. Some of the reasons for investing in the sector include:

• Chemicals are present in most of the products we use and consume everyday.
• They are present in almost any food item we eat.
• Chemicals are used extensively in autos, home appliances, carpets, etc.
• Industrial use of chemicals is wide-ranging.
• In the medical field, chemicals are the key ingredients in drugs and other products.

Seven chemical companies trading on the NYSE are listed below with their current dividend yields:

1.Company: Monsanto Co (MON)
Current Dividend Yield: 1.50%

2.Company: E. I. du Pont de Nemours and Co (DD)
Current Dividend Yield: 3.73%

3.Company: Mosaic Co (MOS)
Current Dividend Yield: 1.67%

4.Company: PPG Industries Inc (PPG)
Current Dividend Yield: 1.66%

5.Company: Sherwin-Williams Co (SHW)
Current Dividend Yield: 0.97%

6.Company: Eastman Chemical Co (EMN)
Current Dividend Yield: 1.70%

7.Company: FMC Corp (FMC)
Current Dividend Yield: 0.88%

Note: Dividend yields noted are as of Jan 13, 2013

Disclosure: No Positions