Environmental, social and corporate governance (ESG) becomes more important to shareholders. Investors paying more attention to ESG stocks and the number of companies that report on CSR are still growing. The 30 companies being part of the Dow Jones Industrial Average are publishing corporate social responsibility (CSR) reports.
In previous articles, we already looked at ESG investing & returns and ESG Dividend Aristocrats. The 10 best ESG Stocks in the Dow-30 is based on the ESG-rating done by the investment research firm MSCI. This firm maintains MSCI ESG ratings on nearly 2,800 companies and is a good source for investors, see for example the ESG Search-tools. Another good ESG data source is Sustainalytics, which is a Morningstar company.
The MSCI ESG ratings range from industry leaders (AAA, AA), to average (A, BBB, BB) to laggard (B, CCC).
Out of the 30 Dow companies, MSCI ranks 12 blue-chip stocks as leaders, which are:
| Company | Ticker | MSCI ESG-rating |
|---|---|---|
| 3M Company | MMM | AAA |
| Microsoft Corporation | MSFT | AAA |
| Merck & Co., Inc | MRK | AAA |
| Coca-Cola Company (The) | KO | AA |
| Amgen Inc | AMGN | AA |
| salesforce.com, inc | CRM | AA |
| Honeywell International Inc | HON | AA |
| American Express Company | AXP | AA |
| Cisco Systems Inc. | CSCO | AA |
| Home Depot Inc. (The) | HD | AA |
| International Business Machines Corporation | IBM | AA |
| Intel Corporation | INTC | AA |
Most of the Dow companies rank “average” on the MSCI-ESG scale:
| Company | Ticker | MSCI ESG-rating |
|---|---|---|
| Procter & Gamble | PG | A |
| Caterpillar Inc. | CAT | A |
| Goldman Sachs Group Inc. (The) | GS | A |
| JP Morgan Chase & Co. | JPM | A |
| Nike Inc. | NKE | A |
| The Travelers Companies Inc. | TRV | A |
| Verizon Communications Inc. | VZ | A |
| Visa Inc | V | A |
| The Walt Disney Company | DIS | A |
| McDonald's Corp. | MCD | BBB |
| Johnson & Johnson | JNJ | BBB |
| Wal-Mart Stores | WMT | BBB |
| Chevron Corp. | CVX | BBB |
| Apple Inc. | AAPL | BBB |
| The Boeing Company | BA | BB |
| UnitedHealth Group Incorporated (DE) | UNH | BB |
When we look at the top-10 best ESG stocks in the Dow-30, we combine the ESG-leaders with analysts’ favorite blue-chip stocks to buy. This ranking is based on the expected annual returns as indicated by Wallstreet’s analysts (see also: 5 Dow Stocks to Buy and 1 to avoid in October according to Wall Street).
These results are presented in the table below:
Other Sources of Dividend Investment Ideas
There are several lists to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Aristocrats Index is based on 64 companies part of the S&P 500 and with 25+ years of consecutive dividend increases.
- The Dividend Kings List is even more exclusive than the Dividend Aristocrats. It is comprised of less than 20 businesses with 50+ years of consecutive dividend increases.
- The MoneyInvestExpert Defensive Aristocrats is a performance-based top-10 selection of the Dividend Aristocrats to outperform the market in the long-term.
- Portfolio lists like the Berkshire Hathaway Portfolio or Bill Gates’stock portfolio can be a source.
- For the European focused investors, there is also the list of European Dividend Aristocrats.
- Dividend Champions are not necessarily members of the S&P 500 index, have increased their dividend for 25 or more consecutive years.
- 100+ years of dividend, the list of stocks that pay over 100 years of dividend can be a list of inspiration.
- Blue Chips stocks from the US or the European ones.
Next to selecting the right dividend stocks, important principles for successful long-term investing are Disciple, Diversification, Defensive & indeed Dividend. Read more about this in our free e-book.
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