Ethical investing is by no means a new concept. Yet a new angle on an old idea has come into prominence in recent years. It’s known as ESG, which is short for environmental, social and governance issues. Investing in ESG stocks is a way for traders to potentially profit while maintaining a firm ethical stance.
An ESG Investor Sentiment Study conducted by Alliance Life found that 66% of millennials expressed an interest in having some money invested in ESG (Hat tip to my InvestorPlace colleague Josh Enomoto for directing my attention to that stat). Millennials comprise a sizable segment of the overall trading pool, so their opinion on ESG is both influential and consequential.
If you’re interested in trading ESG stocks, here are five names that merit your attention:
- Cola-Cola (NYSE:KO)
- Salesforce (NYSE:CRM)
- 3M (NYSE:MMM)
- NextEra Energy (NYSE:NEE)
- McDonald’s (NYSE:MCD)
Is it possible to make money in the markets without selling your soul? Try some or all of these ESG stocks and discover the warm, fuzzy feeling that comes with conscientious investing.
ESG Stocks to Buy: Cola-Cola (KO)
You probably know Coca-Cola for its sweet beverages, but there’s a softer side to the soft-drink giant. Since 1984, The Coca-Cola Foundation has awarded over $1 billion in grants to support sustainable-community endeavors worldwide.
Each year, the company strives to give back 1% of the previous year’s operating income. In 2019, for instance, Coca-Cola contributed almost $125 million to an estimated 294 organizations across the globe. And $88 million of that comes from The Coca-Cola Foundation.
Want to get involved through your investing dollars? KO stock could reward you over the long term, as it sports a tasty forward annual dividend yield of 3.65% as well as a very reasonable trailing 12-month price-to-earnings ratio of 18.78.
Long-term stakeholders of customer relationship management (CRM) platform Salesforce have done well financially. Many of those stockholders may be surprised, however, to learn that Salesforce has earned a spot on Fortune’s “World’s Most Admired Companies” for seven years in a row, including last year.
Sure, one could argue that Salesforce is making the world a better place by enhancing businesses’ data security. Yet there’s another side of this business to be explored. Salesforce wants to achieve 100% renewable energy use by the year 2022. And the company has already surpassed the halfway mark for reaching that objective. The company is a clear standout among green stocks.
CRM stock is heavily traded and a true momentum play, as it’s close to its 52-week high price of $195.72. The trajectory is clearly to the upside and you can ride the wave with surprisingly sustainable Salesforce all the way to the top.
Manufacturing giant 3M is a Dow Jones component that’s provided decades of value for shareholders. And you probably know that the company has recently been in and out of the news due to their role producing surgical and N95 face masks. But you might not have realized that 3M has also resolved to “provide 300,000 work hours of skills-based volunteerism by 3M employees to improve lives and help solve society’s toughest challenges.”
That’s a whole lot of volunteer hours, but 3M has the manpower (and woman-power) to get there. Giving back to the community is the goal, as 3M sends its best and brightest to cities in various global localities to work alongside organizations, nonprofits and local municipalities.
With that in mind, you can volunteer to buy some MMM stock shares at a very compelling price point. Currently, MMM delivers a forward annual dividend yield of 3.8%. Plus, the stock features a trailing 12-month price-to-earnings ratio of 17.9. These metrics highlight a strong profile that any ESG investor can feel good about.
NextEra Energy (NEE)
Did you ever think that an electric company could make the world a better place? NextEra Energy is proving that even a utilities-sector giant can leave a positive footprint, as it’s currently the world’s biggest solar and wind energy producer.
NextEra’s proactive measures to augment its clean-energy strategy haven’t gone unnoticed. “NextEra has reduced its carbon dioxide emissions rate by 52 percent since 2001 and is targeting a reduction of more than 65 percent by 2021, relative to a 2001 baseline,” according to analysts at RBC Capital.
It’s great to be a green stock, but what about making some green? No need to worry about that either, as NEE stock should keep investors satisfied with a forward annual dividend yield of 2.34%. You might consider accumulating shares of NEE as it powers its way towards the prior peak around $282.
If you already have some Coca-Cola, why not get some McDonald’s to go with it? There’s plenty of meat here, as McDonald’s is placing a high priority on its initiatives in the areas of packaging and recycling.
Specifically, McDonald’s has a goal of procuring 100% of the company’s “guest” (i.e., customer) packaging from recycled, renewable or certified sources. And sometime in the future, McDonald’s wants to secure 100% of its fiber-based “guest” packaging from “recycled or certified sources where no deforestation occurs.”
Turning our attention to MCD stock, we can observe that it offers a tasty forward annual dividend yield of 2.74%. Additionally, MCD’s trailing 12-month price-to-earnings ratio of 23.53 should leave you hungry for this value-packed investment opportunity.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.