"I am a big believer that we should be overweighting the industrials," Chad Morganlander, portfolio manager at Washington Crossing Advisors, said Monday on CNBC's "Trading Nation." "We believe that revenues will come in somewhat stronger than anticipated, as well as margins."
Morganlander's fund owns 3M and United Technologies in a dividend-focused portfolio, and he believes that the two stocks — which each pay dividends of about 2.25 percent — will continue to show dividend growth as well as cash flow growth.
While the industrials as a sector have modestly lagged the S&P 500 this year, all three of these stocks have outperformed: Caterpillar is up 16.7 percent in 2017, United Technologies is up 12.3 percent and 3M has risen by 17.6 percent.
Going forward, these will likely continue their outperformance, according to Oppenheimer technical analyst Ari Wald.
"We too have been recommending an overweight position in the industrial sector," due to the "broad-based strength" among that sector's varied groups, Wald said Monday on "Trading Nation."
Out of the three, the technical analyst finds Caterpillar the most attractive pick.
"It has been a terrific leadership stock over the last 18 months, but it is still well below relative peak levels [measuring performance compared the S&P 500] from 2014, so still a lot of rotation potential there," Wald said.
Meanwhile, Morganlander would shy away from Caterpillar, given his concerns over the economic backdrop in China.
It is interesting to note that research analysts, a bullish bunch by nature, take a mild view of all three stocks. For each one, the most common rating is hold, according to FactSet data.