The two best-performing sectors over the last five years are energy (up 171.7%) and information technology (up 136.5%); both have more than doubled the return of the next-best sector (industrials; up 67.3%).
Given the immense momentum behind the artificial intelligence boom and the ongoing conflict in the Middle East, that outperformance shouldn’t come as a surprise.
But if you’re a more conservative investor, finding the right way to play either of those areas of the market can be tough.
The market’s biggest AI winners have largely been high-flying chip stocks (like Micron Tech (MU) – up 1,225% in the last five years), while the outlook for energy can seemingly change at the drop of a hat (or a “Truth”).
And when trendy, momentum-driven rallies fade, they can fade fast.
So if you’re looking to add exposure to the market’s hottest sectors, what’s a more conservative way to do it?
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One option, of course, is using exchange-traded funds (ETFs). ETFs are baskets of securities that focus on a particular theme, market cap, sector or the market as a whole.
If you’re bullish on energy, for example, an oil ETF is a straightforward way to invest in oil, without having to pick individual winners.
The same is true for artificial intelligence, although given how relatively new the theme is, the track records for some of those ETFs aren’t nearly as extensive as they are for many funds other funds you may be more familiar with.
A second option, and one that’s especially appealing if you’re investing for income, is to focus on dividend-paying stocks.
It’s often treated as assumed knowledge in the market, but the data backs it up.
This analysis by Hartford Funds found that, between 1973 and 2025, dividend payers (and especially dividend growers) were less volatile than the market as a whole, as measured by their respective betas.
Dividend payers traded with an average beta of only 0.94, making them 6% less volatile than the S&P 500, while dividend growers and initiators (stocks that either grew their dividend or began paying one) traded with an average beta of just 0.89, making them 11% less volatile than the S&P 500.
In other words, investing in dividend-paying stocks that have exposure to higher-momentum trends in the market can help mitigate risk in a downturn, and that makes it a viable strategy for more risk-averse investors who nonetheless want to participate in these trends.
Cabot’s resident dividend expert Tom Hutchinson has written extensively about a few of his favorite ways to invest in both energy and data centers.
Oil and energy are Tom’s bread and butter, and in the pages of the Cabot Wealth Daily, he’s previously highlighted ConocoPhillips (COP) as a smart way to play the boom in energy; he’s got a few irons in the fire when it comes to AI and data centers, too.
Tom’s Cabot Income Advisor adds a bit of a twist to simply buying dividend-paying stocks by adding covered calls when the stocks he likes as long-term holdings have flown too far, too fast.
And while it’s most often positioned as an income-boosting tool, the fact of the matter is that selling covered calls also serves to reduce overall portfolio risk by bringing in additional cash (premium) in exchange for putting a temporary cap on a stock’s upside. You can read a bit more about how covered calls work here.
If you’re interested in learning how Tom is investing in the data center buildout, the AI bull market, and the energy boom (as well as how he’s using covered calls to boost portfolio income—which he only writes about for subscribers), subscribe to Cabot Income Advisor today.
Right now, we’ve got a special offer available for new subscribers.
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