I pride myself on being an ethical investor. I invest in stocks of companies that demonstrate the values I hold myself. I sometimes choose ESG stocks, which are stocks of companies that rank high on environmental, social, and governmental factors. However, I also make investment decisions independent of ESG rankings based on my ethics.
I particularly value companies that provide opportunities for advancement to all their people and help equalize access to the world’s resources. Protecting the environment is also significant to me. I also avoid “sin” stocks such as those for companies involved in gambling, adult entertainment, tobacco, or weapons.
Of course, I expect a dividend yield from my stocks. I also want to grow my overall wealth through my investments. The best stock market investments are in ethical stocks that perform well. I also like to diversify my portfolio across various industries, so I choose my stocks accordingly.
Best Dividend Stocks with Ethical Business Practices
Based on my criteria, my favorite dividend stocks for ethical investing are here.
1. Nestle SA
Nestle (VTX: NESN) is a famous consumer staples company that produces some of my favorite foods (such as Toll House Cookies). Unfortunately, if you know anything about Nestle, you probably know they have a well-documented history of being one of the most unethical companies on the planet, guilty of many crimes and unethical practices, some of which are frankly sickening. Whether it’s due to public outrage or legal action, Nestle is at least now trying to better itself.
Wealthfront, an automated investment platform, includes Nestle stocks in its ESG portfolio. Betterment, an ethical investment app, also includes Nestle in its ESG portfolio. Nestle has a long history of consistently yielding average or above-average dividends and growing over the long term.
These days, Nestle is also an ethical investment (certainly more ethical than it once was, although that’s not a high bar). Several groups that I respect have given Nestle excellent ESG ratings. MSCI ESG Research gives it an AA rating for its performance against ESG criteria, for example. Nestle also receives good marks from the FTSE4Good Index and the Access to Nutrition Access. Because Nestle so readily touts its recognition for social responsibility, I sense that these ratings are essential to the company. So, I expect that Nestle will continue to undertake sustainable initiatives.
Nestle also is a good choice for me because, up to now, I’ve invested primarily in North American stocks. Because it is a foreign company, Nestle adds geographic diversity to my portfolio.
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2. Procter & Gamble
Procter & Gamble (NYSE: PG) is proud of its social responsibility record, providing an annual “Citizenship Report” on its website. I really like the company’s Children’s Safe Drinking Water program, which has provided more than 20 billion liters of clean water worldwide. I also like P&G’s partnership with Habitat for Humanity, which helps provide affordable housing.
P&G also is a solid performing stock. It has a 58-year history of increasing its dividends, and the risk of losing my money is relatively low. It also tends to withstand both inflation and recession.
I also like and use some of P&G’s brands, such as Bounce, Tide, and Puffs. These brands are leaders in their segments, and P&G invests in marketing to keep them on top of their competition. Their brand promotion techniques will ensure the company’s long-term success.
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3. 3M
3M (NYSE: MMM) has also increased its dividends over a more than 50-year history. 3M has the slogan “Science. Applied to Life,” making a wide range of products. My favorites are Scotch tape, Post-It notes, and dry-erase boards. Because its products are so well-known and the company’s ability to innovate is legendary, its stock is a solid investment opportunity for the future.
3M also performs well among socially responsible companies. It is committed to decarbonizing the industry, improving its environmental footprint, and accelerating climate solutions through innovation. In the past 20 years, it has reduced its absolute Scope 1 and Scope 2 greenhouse gas emissions by 72 percent and continues to strive for more significant reductions.
It is also implementing goals to reduce its use of plastics, which damage the environment. It also treats its employees well and has won the Best Workplace award to prove it. Treating others well is one of my values, so 3M fits well within these values.
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4. The Clorox Company
The Clorox Company (NYSE: CLX) manufactures several brands of cleaning and household products, including Clorox bleach, Pine-Sol, Brita, and Hidden Valley Ranch. The company has a three-pronged sustainable strategy, including improving health, climate, and waste management and investing in communities. The company builds ESG criteria into its overall strategy. Its foundation also provides grants to nonprofits that promote health security and racial justice.
Clorox stock has also consistently performed better than most of the stock market, providing dividend increases for more than 30 years. It’s solid brands, and product diversification will help Clorox continue to perform well. I can buy individual shares of Clorox stock through an investment and financial app, such as M1 Finance.
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5. Becton, Dickinson and Company
Becton, Dickinson, and Company (NYSE: BDX) is a medical technology company that produces a variety of medical devices, such as catheters and cell analyzers. Its ESG goals are in four areas: global health, sustainability, social investing, and inclusion and diversity. The company contributes to meeting UN Sustainable Development Goals, works with supervisors to develop people of all races, genders, and orientations, and has created BD Health Champions to promote more comprehensive access to health care.
BD is also a solid financial investment. It has had 43 years of dividend increases. It is also one of the most highly capitalized medical equipment companies. The outlook for medical device companies is also excellent, which gives me confidence in this stock’s future performance.
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6. W.W. Grainger
W. W. Grainger (NYSE: GWW) is an industrial supplier primarily to businesses in the United States, the United Kingdom, and Japan. Grainger offers various products, including adhesives, HVAC, safety, motors, and hardware. It is an industry leader with a history of growing at attractive margins. Its dividend yield has increased for more than 40 years.
The company believes it has a responsibility to operate sustainably. Its near-term sustainable initiatives are in four areas: customer sustainability solutions, diversity and inclusion, energy and emissions, and supplier diversity. Its goals include reducing emissions by 30 percent by 2030 and improving supply chain sustainability.
Grainger has received several awards for ethical practices, including one from the Human Rights Campaign Foundation’s Corporate Equality Index.
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7. Sigma-Aldrich Corporation
Sigma-Aldrich (Nasdaq: SIAL) is a biotechnology and chemical company with a broad portfolio of 50,000 products, including vaccine and mRNA development, both of which are growing fields. Brands include Millipore, SAFC, MilliQ, and BioReliance.
The company says that sustainability is an important part of its mission. The company has set ambitious green energy goals. For example, it seeks to reduce greenhouse gas emissions from purchased energy by 50 percent by 2030 and aims for climate neutrality by 2040.
It also signed its first agreement with a renewable energy producer in 2021. The agreement guarantees that all the U.S. Life Sciences energy consumption will be from wind farms.
Sigma-Aldrich is also strong financially. It is a division of the German company Merck, which gives it enormous resources and has expanded its global reach. Customers, who are diversified across industries, know its brands. The company has also increased dividends for almost 40 years.
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8. IBM
International Business Machines (NYSE: IBM) has been a solid investment for decades and will continue to be so. The technology and consulting company has increased its dividend yield for 15 years. IBM also is considered a “blue chip” stock because of its financial soundness. All serious investors should include at least a few shares of IBM stock in their portfolio.
IBM also stands out among ethical companies. Its business strategy is built around the 4Ps: “people, planet, profit, and purpose.” The company engages in ethical business practices itself and also consults with other companies to help them become more socially responsible.
The company touts a particularly progressive history of diversity and inclusion. For example, it hired a disabled employee in 1914, 76 years before the passage of the Americans With Disabilities Act. It also is committed to net zero carbon emissions by 2030.
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9. Franklin Resources
Franklin Resources (NYSE: BEN) is better known as Franklin Templeton. It is a global investment management firm founded in 1947. It has several investment brands in addition to Franklin Templeton. They include Lexington Partners, ClearBridge Investments, Martin Currie, and Western Asset.
The firm is socially responsible and analyzes the sustainability of the firms it recommends to its investment clients. The firm’s key themes are the Sustainability of Human Capital, the Sustainability of Natural Capital, and the Sustainability of Financial Capital.
The firm is financially stable, and the overall outlook for the investment industry is good because of demographics. The firm’s stock traditionally offers a good dividend yield.
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10. Ecolab
Ecolab Inc. (NYSE: ECL), a U.S.-based chemical company, is an excellent choice for ethical investors. Its whole mission is based on being environmentally friendly. For example, the company’s technologies save enough water annually to meet the needs of 11.8 million people. The company also offers products that increase food safety and boost operational sufficiency for farmers, food processors, and drug manufacturers.
Indeed, the company announced that the CDP and Dow Jones Sustainability Indices have recognized its achievements in water and climate security. The recognition marks the fourth time the company has ranked well on the CDP list, the third on the global Dow Jones index, and the eighth on the Dow Jones North American index.
The company also scores well on diversity and inclusion initiatives. Forbes has named it one of the world’s most female-friendly companies and best employers.
Ecolab is also a solid financial choice for investors. The company was founded in 1923, so it has a solid history. The global chemistry market is expected to grow significantly in the next few years. Although the stock price is relatively high compared with similar stocks, the company receives high growth scores from some analysts. Its dividends have increased for nearly 30 years.
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11. Expeditors International of Washington Inc.
Expeditors International (NASDAQ: EXPD) is a Fortune 500 logistics company with considerable experience in helping companies build their supply chains. Founded in 1979, it has more than 350 global locations.
The company is financially solid, demonstrating strong revenue growth over the past few years. It has also increased its dividends by 20 years. It has a high Zacks rank, excellent growth scores, and impressive growth fundamentals.
Logistics is seldom considered an environmentally friendly industry. However, Expeditors is a sustainable company and a good choice for socially responsible investors like me. The company specializes in combining multiple shipments efficiently to lessen carbon emissions. It actively helps its clients create a green supply chain.
It also does a great job of protecting its people, eliminating no-layoff policies during economic downturns. In 2021, it created the Director of Environmental Sustainability role to help it continue to be socially responsible.
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12. EOG Resources
EOG Resources (NYSE: EOG) is a crude and natural gas exploration and production company that prides itself on being one of the world’s lowest emissions producers while providing one of the highest returns for investors.
It is the second most active US driller, yet in 2022, it significantly lowered its methane emissions. The company considers ethical actions part of its corporate culture and has an ethics hotline where people can report employees or vendors for unethical behavior.
The company also has an excellent balance sheet due to its long history of controlling operating costs. However, it does not sacrifice environmental sustainability to lower its costs. Over the past few years, the company has delivered double-digit returns on its capital, and dividends have increased for the past 12 years.
The stock price also appreciated significantly, adding the company stock to the Standard and Poor’s 500 Index in 2000. Despite the significant price increases, Zacks indicates the stock may still be a good pick for value investors.
The Houston-based company operates across the United States, Trinidad, and China.
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13. United Natural Foods
United Natural Foods (NYSE: UNFI) provides organic and natural foods under several brands, including UNFI, Blue Marble, Woodstock Farms, and ProOrganics. It also requires that its suppliers be certified organic, non-GMO, and Fair Trade. It actively seeks ethnic and gender diversity among its suppliers.
The company practices environmental sustainability by having an extensive network of distribution centers that minimize travel and by using trailers that operate on solar power.
The company’s sustainability strategy recognizes that everything it does impacts the broader food system and strives to make its impact positive. The company also aims for a transparent governance structure to engage its associates at every step.
UNFI is also strong financially. Many Wall Street analysts are urging investors to buy UNFI stocks, saying the stock price will rise.
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14. Microsoft
Microsoft (NASDAQ: MSFT) is a technology company that makes software products, operating systems, and computers. The company demonstrates social responsibility in environmental sustainability, human capital, and governance. For example, actively reducing carbon emissions and plans to be carbon neutral by 2030.
It has an active waste management goal, and four data centers have zero waste. Through various projects, it has saved 1.3 million cubic feet of water. It also introduced Microsoft Sustainability Manager to help companies measure and manage their environmental impact.
Microsoft is also working to equalize technology access for all the world’s people. The company also tries to be inclusive in its hiring and promotion practices and has released a diversity and inclusion report for almost a decade. The report acknowledges that the company still has progress to make but says its numbers show considerable improvement in representation across several categories.
Microsoft is one of the most valuable companies in the world and is an excellent long-term financial investment. It has an excellent growth rating and value grade. It has also increased its dividend payments by 11 years.
15. General Mills
General Mills (NYSE: GIS) is a U.S.-based food conglomerate with more than 100 well-known brands, such as Cheerios, Betty Crocker, Pillsbury, Green Giant, and Progresso. Founded 150 years ago, it is a financially stable company and an excellent, low-risk investment. Its dividend yield has increased for more than a decade.
General Mills also ranks high on the list of socially responsible companies. In 2022, Fortune Magazine named it one of the world’s most admired, and Newsweek named it one of the Most Responsible Companies.
It is on Seramount’s Diversity Best Practices Leading Inclusion Index, its list of Best Companies for Dads, and Best Companies for Multicultural Women and Executive Women. It has also won awards for being a good employer for LBGTQ employees and military members. It also advances regenerative agriculture.
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16. Bunge Ltd
Bunge (NYSE: BG) is an agribusiness and food company. It is the world’s largest oilseed producer. It also processes food and fertilizer and trades grains. In 2005, it formed a joint venture with KBBV and Diester Industrie to produce biodiesel fuels in Europe. Zacks says the stock is undervalued, which makes it a good buy for value investors. The dividend yield has increased each year for more than 13 years.
In addition to financial performance goals, Bunge seeks to advance sustainability and strengthen global food security. It also strives for ethical leadership. Its policy has three pillars: action on climate, responsible supply chains, and accountability. Its 2022 Sustainability Report says it has reduced Scope 1 and 2 emissions by 4.8 percent and Scope 3 by 2.2 percent.
Half of its supply chains are deforestation-free as the company works toward its goal of being deforestation-free by 2025. 50/50 Women On Boards has recognized the company as a 3+ corporation, which means it has three or more women serving on its corporate board. The company has also increased female leadership in senior roles by 3 percent.
I can buy my favorite ethical stocks in several ways. Many of them are included in Wealthfront’s ESG portfolio, which is a great platform for automating the investment process. Many of these stocks are also included in Betterment‘s ESG portfolio.
I can choose these stocks a la carte on M1 Finance or an ESG portfolio on that app. All three of these platforms require only a nominal investment to start.
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