International Women’s Day came and went March 8. While many companies talk about how they’re tackling equality, these seven stocks to buy are walking the talk.
Not only was it a day for women to celebrate their tremendous contribution to society, but it was also a chance for brands, large and small, to demonstrate their commitment to equality and diversity.
In 2020, to recognize equality, a total of 78 financial exchanges participated in the sixth annual Ring the Bell for Gender Equality. The event saw exchanges from around the world ring the opening or closing bell in the days leading up to and after International Women’s Day.
“The theme of this year’s International Women’s Day – I am Generation Equality – celebrates the progress that has been made all around the world in advancing gender equality,” stated Nandini Sukumar, CEO of the World Federation of Exchanges.
“At the WFE, we are proud to say that many member exchanges have been proactive in promoting gender equality for some time now, as evidenced by their own projects, and their active participation in the annual Ring the Bell for Gender Equality initiative.”
If you believe in equality, I encourage you to consider adding these seven stocks to your portfolio.
It shouldn’t come as a surprise to anyone that Apple (NASDAQ:AAPL) ranks high when it comes to equality. The Human Rights Campaign Foundation’s annual Corporate Equality Index for LGBTQ equality and inclusion gave the iPhone maker a perfect score in 2019, one of only 13 Fortune 500 companies to get 100%. Sadly, Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B), which owns 5.6% of the company, refused to answer the foundation’s survey. It got a 20% score as a result, well below the average score of 67%.
In January 2019, I discussed the seven reasons why Warren Buffett’s bet on Apple would pay big dividends despite many in the media predicting it would be his downfall. AAPL stock is up 81% since then, despite giving back a chunk in the past month due to the coronavirus, oil prices, and bond yields-led correction.
Fortune named Apple the world’s most admired company for 12 consecutive years. CEO Tim Cook has a lot to do with that success, before and after becoming the chief executive in 2014.
Procter & Gamble (PG)
It’s easy to be cynical about large consumer products companies such as Procter & Gamble (NYSE:PG), who freely spend marketing dollars on its top brands, just as you or I would for our morning coffee intake.
However, the recent news story about P&G partnering with Time to release 100 covers honoring 100 women over the past 100 years, suggests there’s more to the company than a bunch of billion-dollar brands. It has 23 to be exact, but I digress. There is a documentary, special edition hardcover book, and digital website planned for the occasion.
“Here, in the 100th anniversary of the 19th Amendment, and right around International Women’s Day, it seemed like the appropriate time to be able to recognize the hundred women from 1920 to 2020 who have been leaders, innovators, activists, entertainers, athletes and artists that defined the past century,” said Marc Pritchard, chief brand officer of P&G.
That’s right, white women have been able to vote in the U.S. for 100 years. Unfortunately, African American women weren’t given the same freedoms granted under the 19th amendment. Only after the passage of the 1965 Voting Rights Act, did everyone in America gain the right to vote.
In 2065, on the 100th anniversary of the passing of the 1965 law, P&G shareholders ought to hope the company is still doing right by women.
Best Buy (BBY)
I’m a big believer in women holdings positions of corporate power. It’s not merely because it’s the right thing for corporate America to do, but it also translates into superior stock performance, the main objective of most long-term investors.
“When it comes to business and investing, gender diversity is still an aspiration,” states Fidelity’s website. “On the business side, just 5% of Russell 3000 companies have a woman as chief executive, and just 18% of board members are women. When it comes to personal finance, only 29% of women see themselves as investors, according to a recent Fidelity survey.”
S&P Global (NYSE:SPGI) published a 2019 report that examined the earnings and stock performance of companies after new executive appointments were made. Based on data from 2002 through May 2019, it found that for every female CEO, 19 men were in the top job. In terms of CFOs, the ratio was 6.5-to-1 in favor of men.
Here’s the kicker: In the 24 months after a CEO appointment, companies who chose a woman did 20% better than the stocks of companies who chose a man.
Best Buy (NYSE:BBY) appointed Corie Barry to replace Hubert Joly as its CEO in April 2019. She is the first woman to run the electronics retailer. Since the announcement, BBY stock rose from $75 to a 52-week high of $91.99 in January, before hitting the skids in February.
Barry had her feet put to the fire early in 2020 when an internal investigation was conducted based on an anonymous tip that the CEO had carried out an inappropriate relationship with another Best Buy executive. The investigation found no evidence of any wrongdoing.
She can now carry on building on the legacy of Joly, who turned the retailer from an also-ran into a first-rate competitor to Amazon (NASDAQ:AMZN). I continue to like BBBY stock under its former CFO.
I have been a fan of Lululemon (NASDAQ:LULU) for some time. This, despite the fact the company has had its fair share of corporate culture issues in the past. However, as I stated immediately after hiring Calvin McDonald in July 2018, it was an inspired selection by chairman Glenn Murphy and the entire LULU board.
Since McDonald’s appointment, LULU stock is up 68%, despite getting ravaged in the past three weeks due to fears over the coronavirus outbreak. It’s still not a cheap stock, but if you hold for the long-term, you will be rewarded.
On March 5, just in time for International Women’s Day, Lululemon released its latest gender pay equity findings. It has 100% pay equity, which is very important, given 78% of its staff are women. It would not look good to investors if the truth were anything but positive. It is the company’s third consecutive year hitting 100% pay equity.
It also reported that 50% of its board are women, 57% of its vice presidents or higher are women, and 60% of the senior management team are women.
“We’re fortunate to have a number of powerful female leaders throughout the company, which helped us approach this work with the utmost intention,” Lululemon said in a statement. “We’re proud that over time, that investment has declined as our programs for diversity and inclusion have become stronger. Even so, re-evaluating gender pay equity has been built into our annual plans to ensure consistency year after year for all our people.”
It might sound like corporate-speak, but it’s this attention to detail that has made it so successful. I would not bet against it revisiting its all-time high of $266.20 at some point in 2020.
Taylor Morrison Home (TMHC)
I recently discussed the “7 Reasons to Own Taylor Morrison Stock.” At the top of the list were two essential points as it relates to gender equality.
First, Taylor Morrison (NYSE:TMHC) has a top-notch CEO in Sheryl Palmer, who has led the business since August 2007. Secondly, without making a big deal, it prioritizes diversity of all kinds. She told CNBC’s Jim Cramer about the company’s philosophy in early February.
“The benefit of our organization is that we have different people thinking about the same problem differently,” Palmer told Cramer. “It gets us to a better place, and that’s what corporate America is missing today.”
Interestingly, Taylor Morrison’s board is 57% women, which is even higher than Lululemon, something you wouldn’t expect from the male-oriented world of homebuilding.
Having completed its merger with William Lyon Homes in early February, Taylor Morrison is now the 5th-largest builder in America with top-five market positions in 16 of its 23 markets.
Down a bunch since mid-February, TMHC stock is now officially on sale. Buy away!
Are you familiar with Equileap? It’s a company that provides data on gender equality to companies, governments and investors around the world. In October, it released the “Gender Equality Global Report & Ranking,“ which included the top 100 companies in the world.
Number one on the list is Diageo (NYSE:DEO), the UK-based liquor company behind Johnnie Walker, Bulleit, Smirnoff, Tanqueray, Crown Royal and many others.
“Diageo has achieved gender balance on the executive level (40%), and women represent 37.5% of the board, 34% of senior management and 32% of the workforce, at the time of research,” Equileap reported. “It has no pay gap (i.e. published an overall mean pay gap of less than 3%) and has a strategy to close any gender pay gaps. It is one of the only five companies globally to offer equal lengths of 26 weeks’ paid parental leave for both the primary and secondary carers, for all their employees globally.”
All 3,519 companies ranked in Equileap’s 2019 survey, were scored on 19 different criteria, including gender balance, equal compensation, work-life balance, policies promoting gender equality, commitment to transparency & accountability, and a couple of exclusion criteria.
The top 100 companies, including Diageo, are equal-weighted constituents of the Solactive Equileap Global Gender Equality 100 Leaders Index.
Over the past five years, Diageo has an annualized total return of 5.7% (including dividends), 405 basis points higher than its UK benchmark. Compared to the overall U.S. market, it has underperformed by 170 basis points.
With an attractive 3.6% yield, why not get paid to wait for Diageo’s next leg up, while also investing in a company that cares about women?
Bank of America (BAC)
Only two U.S. companies made Equileap’s top 12 companies in 2019. One of them was General Motors (NYSE:GM) with a score of 66%, good for 11th place. While I like the fact that Mary Barra, an engineer, is CEO, I had to go with Bank of America (NYSE:BAC) in the third spot with a 74% ranking.
The only disappointment in Bank of America’s third place finish was the fact it didn’t achieve gender balance at the board level. According to its proxy, out of the 17 directors on the board, six are women, a female participation rate of 35%. With women influencing so much of the household savings, investment, and spending, that’s got to be closer to 50%.
However, on the plus side, it does offer flex-time, pays a living wage, has a strategy to close the gender pay gap and provides paid leave of 16 weeks to both parents.
Also, Bank of America understands that encouraging women to start their own businesses is good for the long-term success of the bank.
“Forward-looking companies like Bank of America, which understand the potential of women entrepreneurs to spur economic growth, create jobs and advance inclusive prosperity, are increasingly supporting women entrepreneurs,” wrote Melanne Verveer, Co-Founder, Seneca Women and Executive Director, Georgetown Institute for Women, Peace and Security, in November 2019.
“With leadership from Vice Chairman Anne Finucane, a true champion for women, the Bank has launched many initiatives to advance women’s economic participation, including the Bank of America Center for Women’s Entrepreneurship at Cornell.”
I’m not a massive fan of BAC stock, but the fact it ranks so highly on the equality front has me rethinking my position. Down 35% year to date, now is probably as good a time as any to consider an investment.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.