Last week, I started to discuss the topic of ethical investing. The point of my first post was to explain the definition of a socially responsible company. As capitalism has shown both its strengths and weaknesses, some investors are interested in companies that will not only produce great results for the next quarter or two but corporation that believe in sustainable business models. While no one is perfect, more and more companies are trying to become good corporate citizens. Is it just a marketing strategy to get more investors interested to buy their shares? I would bet that some investor relations’ departments have thought about this one. But in the mean time, these companies are trying to:
– Operate an ethical business (they follow laws and don’t touch controversial fields. They have a social consciousness while operating).
– Have ethical corporate governance (they are careful about how bonuses and salaries are distributed and how power is controlled within the corporation).
– Have a sustainable business model (they make sure that their business will be viable and profitable for several years to come).
– Take care of their employees and society in general (they don’t just follow the working norms but they are pioneers in terms of workers’ benefits, employees’ care and consideration. They also act as a citizen in our society and try to give back to their community).
So, I went to the different social indices (Dow Jones Sustainability Index, LOHAS, FTSE KLS 400 Social Index and the Calvert Social Index) and tried to pull out the maximum stocks that qualify under the different ethical criteria. It was not easy as the stock list is not always easy to find depending on the social index we are looking at. Some display their social stock lists on their website, others are more conservative with regards to their information sharing.
Socially Responsible Stock List that Pays Dividends:
Since we are talking about dividend investing on this blog, I have subtracted all the stocks that don’t pay dividends. On the other hand, this ethical stock list also contains some very low dividend payers as well. The point of today’s post was to provide you with the complete socially responsible stocks that pay dividends. Then, I’ll build an ethical portfolio with a high dividend yield in my 3rd post of this series.
US Socially Responsible Stock List with Dividends:
Ticker Name INDUSTRY_SUBGROUP Price Dividend Yield 5 year dividend growth Payout Ratio Country
HCN Health Care REIT Inc REITS-Health Care 45,36 6,08 2,179339647 222,15 US
VZ Verizon Communications Inc Telephone-Integrated 32,19 6,06 3,63257575 145,51 US
T AT&T Inc Telephone-Integrated 28,24 5,96 5,425074577 77,65 US
PGN Progress Energy Inc Electric-Integrated 43,8 5,67 0,99687624 82,77 US
DUK Duke Energy Corp Electric-Integrated 17,61 5,56 -3,679842949 114,34 US
EXC Exelon Corp Electric-Integrated 39,82 5,27 5,589286327 51,29 US
PNW Pinnacle West Capital Corp Electric-Integrated 40,79 5,15 1,75545609 258,99 US
ED Consolidated Edison Inc Electric-Integrated 48,66 4,89 0,862197995 74,77 US
HRB H&R Block Inc Commercial Serv-Finance 12,46 4,82 5,688560009 41,09 US
PCL Plum Creek Timber Co Inc Forestry 36,1 4,65 2,021836042 116,53 US
ETR Entergy Corp Electric-Integrated 71,99 4,61 8,447176933 46,86 US
MRK Merck & Co Inc Medical-Drugs 34,1 4,46 0 27,89 US
PEG Public Service Enterprise Group Inc Electric-Integrated 31,44 4,36 4,052569866 42,27 US
XEL Xcel Energy Inc Electric-Integrated 23,52 4,29 3,322111845 64,99 US
NYX NYSE Euronext Finance-Other Services 28,46 4,22 N/A 142,47 US
SE Spectra Energy Corp Pipelines 23,7 4,22 N/A 77,22 US
ANAT American National Insurance Co Multi-line Insurance 78,25 3,94 0,797971964 527,94 US
PCG PG&E Corp Electric-Integrated 47,27 3,85 14,67774391 41,64 US
KFT Kraft Foods Inc Food-Misc/Diversified 30,34 3,83 6,541855335 56,77 US
NEE NextEra Energy Inc Electric-Integrated 52,56 3,81 7,020786285 47,33 US
HNZ HJ Heinz Co Food-Misc/Diversified 47,72 3,77 8,261158943 58,04 US
ABT Abbott Laboratories Medical-Drugs 47,66 3,69 9,652802467 43,09 US
MWV MeadWestvaco Corp Paper&Related Products 25,21 3,65 0 69,78 US
WM Waste Management Inc Non-hazardous Waste Disp 34,83 3,62 8,09327507 57,24 US
COP ConocoPhillips Oil Comp-Integrated 60,94 3,61 12,74863434 58,3 US
CVX Chevron Corp Oil Comp-Integrated 82,48 3,49 10,16815281 50,55 US
PLD ProLogis REITS-Warehouse/Industr 12,88 3,49 -17,59147072 N/A US
INTC Intel Corp Electronic Compo-Semicon 21,07 3,42 14,5086031 71,23 US
JNJ Johnson & Johnson Medical Products 63,14 3,42 16,86570358 43,42 US
CEG Constellation Energy Group Inc Electric-Integrated 28,63 3,35 -5,738075256 4,33 US
CPB Campbell Soup Co Food-Misc/Diversified 34,47 3,19 9,776330948 44,08 US
ERIE Erie Indemnity Co Insurance Brokers 60,39 3,18 8,111421585 86,43 US
MCD McDonald's Corp Retail-Restaurants 77,42 3,15 26,84389687 49,2 US
PG Procter & Gamble Co/The Cosmetics&Toiletries 63,45 3,04 11,58232403 48,84 US
GE General Electric Co Diversified Manufact Op 15,86 3,03 -13,75114822 62,15 US
VR Validus Holdings Ltd Reinsurance 29,1 3,02 N/A 8,35 US
PEP PepsiCo Inc/NC Beverages-Non-alcoholic 64,04 3 13,67301178 46,57 US
KO Coca-Cola Co/The Beverages-Non-alcoholic 62,08 2,84 9,67910862 55,61 US
UPS United Parcel Service Inc Transport-Services 67,51 2,79 8,161032677 84,53 US
CL Colgate-Palmolive Co Cosmetics&Toiletries 76,81 2,76 12,83260441 38 US
ALL Allstate Corp/The Multi-line Insurance 29,84 2,68 -8,391945839 50,55 US
IBKC Iberiabank Corp Commer Banks-Southern US 51,45 2,64 7,48456955 16,9 US
MHP McGraw-Hill Cos Inc/The Multimedia 35,61 2,64 7,593155861 39,4 US
MDT Medtronic Inc Medical Instruments 34,17 2,63 19,02527237 29,27 US
TRV Travelers Cos Inc/The Property/Casualty Ins 54,73 2,63 8,924939156 19,14 US
JCP JC Penney Co Inc Retail-Major Dept Store 30,8 2,6 9,85605526 74,54 US
MMM 3M Co Diversified Manufact Op 84,24 2,49 5,176377296 44,82 US
MSFT Microsoft Corp Applications Software 25,81 2,48 16,271101 24,24 US
BAX Baxter International Inc Medical Products 50,32 2,46 14,79077721 29,46 US
BLK BlackRock Inc Invest Mgmnt/Advis Serv 167,28 2,39 26,86995506 48,11 US
APD Air Products & Chemicals Inc Industrial Gases 83,21 2,36 8,962797165 39,59 US
HTLF Heartland Financial USA Inc Commer Banks-Central US 16,97 2,36 4,563955307 532,35 US
WHR Whirlpool Corp Appliances 74,19 2,32 0 39,12 US
GHL Greenhill & Co Inc Finance-Invest Bnkr/Brkr 78,45 2,29 41,26172638 75,27 US
UTX United Technologies Corp Aerospace/Defense-Equip 74,16 2,29 9,489162445 30,61 US
LYTS LSI Industries Inc Bldg Prod-Light Fixtures 8,78 2,28 -17,39519119 337,71 US
CAH Cardinal Health Inc Medical-Whsle Drug Dist 34,41 2,27 32,67583847 44,21 US
AMAT Applied Materials Inc Semiconductor Equipment 12,46 2,25 17,31606865 N/A US
ROK Rockwell Automation Inc Industrial Automat/Robot 63,72 2,2 8,789289474 159,56 US
CAT Caterpillar Inc Machinery-Constr&Mining 80,37 2,19 13,57883549 115,98 US
GAIA Gaiam Inc Retail-Misc/Diversified 6,89 2,18 N/A 0 US
BOKF BOK Financial Corp Commer Banks-Central US 47,49 2,11 26,97048759 31,88 US
SWY Safeway Inc Food-Retail 22,79 2,11 34,49016953 N/A US
WAG Walgreen Co Retail-Drug Store 34,01 2,06 21,60808182 27,26 US
ACN Accenture PLC Computer Services 43,95 2,05 22,42399025 46,28 US
FCX Freeport-McMoRan Copper & Gold Inc Metal-Copper 97,61 2,05 -16,7446804 2,57 US
PX Praxair Inc Industrial Gases 90,4 1,99 20,45859146 39,15 US
DOW Dow Chemical Co/The Chemicals-Diversified 30,56 1,96 -14,84516907 276,96 US
BDX Becton Dickinson and Co Medical Products 76,61 1,93 15,50102711 29,48 US
TGT Target Corp Retail-Discount 53,79 1,86 11,55067158 20,22 US
IBM International Business Machines Corp Computer Services 142,24 1,83 26,23188972 21,3 US
UMPQ Umpqua Holdings Corp Commer Banks-Western US 10,98 1,82 -5,111991882 N/A US
SPLS Staples Inc Retail-Office Supplies 20,07 1,79 16,16146278 32,07 US
COL Rockwell Collins Inc Aerospace/Defense 55,16 1,74 14,86983585 27,24 US
SBUX Starbucks Corp Retail-Restaurants 29,84 1,74 N/A 21,01 US
UNM Unum Group Life/Health Insurance 21,59 1,71 3,13103199 12,26 US
TXN Texas Instruments Inc Electronic Compo-Semicon 30,57 1,7 36,08221436 38,57 US
HLF Herbalife Ltd Vitamins&Nutrition Prod 66,17 1,51 N/A 23,95 US
PLL Pall Corp Filtration/Separat Prod 43,15 1,48 9,856053352 30,42 US
JCI Johnson Controls Inc Auto/Trk Prts&Equip-Orig 35,5 1,47 9,301197052 23,44 US
MAN Manpower Inc Human Resources 53,87 1,37 13,09264183 N/A US
NKE NIKE Inc Athletic Footwear 80,51 1,34 16,65161514 27 US
BK Bank of New York Mellon Corp/The Fiduciary Banks 27,69 1,3 -17,14936638 N/A US
WY Weyerhaeuser Co Forestry 16,91 1,18 17,49777985 N/A US
CMI Cummins Inc Engines-Internal Combust 91,32 1,15 21,29024124 32,94 US
SLB Schlumberger Ltd Oil-Field Services 73,18 1,15 15,49529839 31,88 US
MCK McKesson Corp Medical-Whsle Drug Dist 64,12 1,12 20,11244583 10,37 US
AGO Assured Guaranty Ltd Financial Guarantee Ins 17,29 1,04 13,39665985 22,98 US
HAL Halliburton Co Oil-Field Services 35,03 1,03 7,565376759 28,08 US
NEM Newmont Mining Corp Gold Mining 59,39 1,01 2,383625507 44,94 US
DIS Walt Disney Co/The Multimedia 36,92 0,95 7,83788538 0 US
AA Alcoa Inc Metal-Aluminum 13,03 0,92 -27,5220356 N/A US
M Macy's Inc Retail-Regnl Dept Store 24,15 0,83 -9,392583847 24 US
DGX Quest Diagnostics Inc/DE Medical Labs&Testing Srv 50,12 0,8 3,00259757 10,15 US
HPQ Hewlett-Packard Co Computers 41,8 0,77 0 9,98 US
ORA Ormat Technologies Inc Independ Power Producer 26,98 0,74 24,57309723 16,48 US
CSE CapitalSource Inc Commer Banks-Eastern US 6,09 0,66 N/A N/A US
HES Hess Corp Oil Comp-Integrated 67,78 0,59 0 17,51 US
LNN Lindsay Corp Machinery-Farm 59,07 0,58 7,487317085 16,29 US
PLT Plantronics Inc Telecommunication Equip 34,4 0,58 0 12,79 US
FDX FedEx Corp Transport-Services 85,87 0,56 8,924936295 11,57 US
IFSIA Interface Inc Office Furnishings-Orig 14,45 0,55 N/A 5,36 US
DDS Dillard's Inc Retail-Regnl Dept Store 29,71 0,54 0 17,23 US
NLC Nalco Holding Co Water Treatment Systems 29,45 0,48 N/A 31,9 US
MLHR Herman Miller Inc Office Furnishings-Orig 20,01 0,44 -21,21982574 17,41 US
MTX Minerals Technologies Inc Chemicals-Specialty 59,09 0,34 0 N/A US
EP El Paso Corp Pipelines 13,56 0,29 -24,21417236 N/A US
EWBC East West Bancorp Inc Commer Banks-Western US 17,37 0,23 -27,5220356 10,9 US
WBS Webster Financial Corp Commer Banks-Eastern US 17,12 0,23 -47,25676346 N/A US
STT State Street Corp Fiduciary Banks 43,13 0,09 -43,585289 1,15 US
Canadian Socially Responsible Stock List with Dividends:
Hey Canadians, I didn’t forget about you ;-). In order to put together an interesting list of socially responsible stocks, I used the Jantzi index on the Canadian Market. Once we subtract companies that don’t pay dividends, you will see that you don’t have much choice…. Well it’s the dilemma of dividend investing in Canada anyways, right?
Ticker Name INDUSTRY_SUBGROUP Price Dividend Yield 5 year dividend growth Payout Ratio Country
TA TransAlta Corp Electric-Integrated 20,5 5,66 3,012896 129,83 CN
SLF Sun Life Financial Inc Life/Health Insurance 28,92 4,98 8,560497 146,59 CN
BMO Bank of Montreal Commer Banks Non-US 58,27 4,81 8,641874 91,78 CN
CM Canadian Imperial Bank of Commerce/Canada Commer Banks Non-US 75,41 4,61 5,521153 131,23 CN
TRP TransCanada Corp Pipelines 36 4,44 5,568418 73,87 CN
NA National Bank of Canada Commer Banks Non-US 65,09 3,81 7,593157 50,06 CN
RY Royal Bank of Canada Commer Banks Non-US 53,1 3,77 11,22398 77,77 CN
BNS Bank of Nova Scotia Commer Banks Non-US 52,63 3,73 8,227203 59,21 CN
MFC Manulife Financial Corp Life/Health Insurance 15,23 3,41 -2,160312 93,22 CN
TD Toronto-Dominion Bank/The Commer Banks Non-US 72,84 3,35 9,080357 70,27 CN
ENB Enbridge Inc Pipelines 55,44 3,07 10,38045 35,69 CN
ECA Encana Corp Oil Comp-Explor&Prodtn 28,56 2,83 22,29058 57,43 CN
CVE Cenovus Energy Inc Oil Comp-Integrated 29,01 2,76 N/A 23,3 CN
CNR Canadian National Railway Co Transport-Rail 64,57 1,67 17,59407 25,57 CN
TLM Talisman Energy Inc Oil Comp-Explor&Prodtn 19,42 1,29 17,36186 N/A CN
SU Suncor Energy Inc Oil Comp-Integrated 33,67 1,19 27,22597 34,99 CN
ABX Barrick Gold Corp Gold Mining 49,99 0,97 15,47072 N/A CN
NXY Nexen Inc Oil Comp-Explor&Prodtn 21,55 0,93 14,86984 19,4 CN
POT Potash Corp of Saskatchewan Inc Agricultural Chemicals 138 0,29 10,79949 11,95 CN
AEM Agnico-Eagle Mines Ltd Gold Mining 78,95 0,23 37,99046 32,26 CN
Are you surprised by this Stock List?
Interestingly enough, there seem to be some “errors” in the definition of socially responsible. I was surprised to see Nike and McDonald’s in the US stock list as well as Encana or Suncor that are heavily active in the oil sands industry. As I said before, nothing is perfect and social investment is still a matter of interpretation!
Next Step: Building a Socially Responsible Stock Portfolio That Pays Dividends
In Wednesday’s post, I will look at both the US and Canadian stock lists and pick the best shares with the highest dividend yields. I am curious to see if it’s possible to get good returns while investing ethically!
Interesting lists for certain. Brings me back to the oil/gas/distribution sector. A lot of these companies are the “best of the worst” so to speak in that they are much “greener” than their counterparts. However, these companies still produce mass amounts of waste and environmental destruction. Just over a month ago all those birds (hundreds) had to be put down after hitting an oil sand. I look forward to seeing your portfolio in a few days!
Yeah, I have cut most of them to make it more “socially acceptable”. The end result is pretty neat. I’m looking forward for your reaction on Wednesday!
Mike,
Check out Ecology and Environment (EEI). http://www.google.com/finance?q=NASDAQ:EEI
“Ecology and Environment, Inc. (EEI) is an environmental consulting firm. The Company has completed more than 50,000 projects for a variety of clients in 96 countries, providing environmental solutions. The Company has rendered consulting services to commercial and government clients in a variety of service sectors, such as energy, natural resource management/restoration, green programs, planning, emergency planning and management, hazardous material services, international and health sciences. ”
With a yield of 3.41% and having raised the dividend 17 times in the last 23 years this company seems to fit the dividend / socially responsible strategy.
In addition, EEI has the 10th highest Return on Assets in this segment of the market. Its ROA was 8.32% for the last 12 months. Its Asset Turnover ratio (revenue divided by assets) was 1.84 for the same period. EEI has raised dividends since 2006 (and I think I was incorrect on the Yield which might be 3.3%).
I really need to get my thoughts out at one time – apologies.
Where we struggle, as the theme of our blog, is being sustainable. Diversification in oil/gas/distribution makes sense as many of those companies are dividend aristocrats. Avoiding them seems contrary to the often repeated theme of diversifying where it makes sense to financially.
I will write more on our strategy on our blog but I think we’re going to take more of a “one bad apple, 10 good apples” approach for our portfolio. Attempting to achieve balance but still be able to sleep at night.
Does McDonald’s really count as a socially responsible company?
@ Evan,
I guess they treat their beef right 😉 hahaha!
I won’t include it in my “ideal” portfolio tomorrow 😉
Isn’t the better way to to do socially responsible investing would be to find companies that you don’t agree with that pay dividends (especially eligible Canadian dividends, if you are Canadian) and use any money they pay you to donate to registered charities that you support?
Technically you are taking the profits of evil and shifting them to good causes and getting preferential tax treatment on both ends. If you donate the money directly to causes that oppose the company you invested in you get the tax benefits while also hurting the company. This seems like epic win all around.
@Traciatim,
that’s an interesting point of view but I doubt will get much growth out of your portfolio if you spend all your dividends 😉
@Evan – I see where you’re coming from, but in all honesty, if you check on what McDonalds is up to in foreign markets, you’d be surprised at just how ethically they conduct business. in other words…don’t hate the player – hate the game.