{"id":31583,"date":"2012-08-13T20:51:46","date_gmt":"2012-08-13T20:51:46","guid":{"rendered":"http:\/\/countingpips.com\/forex-news\/2012\/08\/naughty-or-nice-part-1-5-dividend-stocks-you-can-feel-good-about-owning\/"},"modified":"2012-08-13T20:51:46","modified_gmt":"2012-08-13T20:51:46","slug":"naughty-or-nice-part-1-5-dividend-stocks-you-can-feel-good-about-owning","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex-news\/2012\/08\/13\/naughty-or-nice-part-1-5-dividend-stocks-you-can-feel-good-about-owning\/","title":{"rendered":"Naughty or Nice Part 1: 5 Dividend Stocks You Can Feel Good About Owning"},"content":{"rendered":"

By The Sizemore Letter<\/a><\/p>\n

This is Part 1 of a two-part series on \u201cNaughty and Nice\u201d dividend stocks.<\/em><\/p>\n

Perhaps I\u2019m some sort of anti-social deviant, but I\u2019ve never been a big fan of socially-responsible investing.\u00a0 It has always seemed crazy to me to ignore profitable investment opportunities because a company\u2019s product happens to be politically incorrect at that particular moment.<\/p>\n

And yes, notions of what constitutes \u201csocially responsible\u201d do happen to shift over time.\u00a0 Not too long ago tobacco was considered a harmless vice and arms manufacturers were considered patriotic.<\/p>\n

Likewise, all-American companies like McDonalds ($<\/span>MCD<\/a>)<\/strong> and Coca-Cola ($<\/span>KO<\/a>) <\/strong>are considered respectable investments today, but what about tomorrow?\u00a0 After all, like tobacco companies, both sell products that are bad for your health.\u00a0 And like cigarettes, many cities are starting to tax and regulate sugary soft drinks for public health reasons.<\/p>\n

Nevertheless, I suppose there is nothing wrong with owning companies that make you feel good about yourself, so long as you maintain your objectivity.\u00a0 I\u2019ll give you five of my favorite \u201cwarm and fuzzy\u201d stocks today.\u00a0 To make this list, the company has be engaged in socially responsible businesses and must pay a respectable dividend.<\/p>\n

Let\u2019s start with Swiss food and confectionary giant Nestl\u00e9 ($<\/span>NSRGY<\/a>).<\/strong>\u00a0 Nestl\u00e9 is one of the largest food and health products companies in the world, making everything from instant coffee to baby food.\u00a0 (The ice cream and chocolate businesses might make Nestl\u00e9 a little naughty, but we\u2019ll wink and look the other way this time.)<\/p>\n

Nestl\u00e9 has recently made a smashing success of its Nespresso pods, endorsed by actor George Clooney\u2014himself no stranger to feel-good charitable causes\u2014and the company takes pride in its social responsibility. Nestl\u00e9\u2019s former CEO Peter Brabeck-Letmathe summed up the company\u2019s position: \u201cAs stewards of large amounts of shareholders\u2019 capital, it is my firm belief that, in order for a business to create value for its shareholders over the long term, it must also bring value to society.\u201d<\/em><\/p>\n

Nestl\u00e9 has backed up its words with actions over the years.\u00a0 Nescaf\u00e9, one of the company\u2019s most iconic products, came out of an effort in the 1930s to help Brazilian coffee farmers deal with a serious oversupply coffee beans. Nestl\u00e9 has done well by doing good.<\/p>\n

The U.S.-traded Nestl\u00e9 ADRs pay a dividend of 3.4%, which is quite a haul in today\u2019s low-yield world.<\/p>\n

Next on the list is electric utility PG&E Corp. ($<\/span>PCG<\/a>). <\/strong>\u00a0One might not normally think of a producer of electricity as being particularly socially responsible, but PG&E generates more than half of its power from non-greenhouse-gas-emitting sources.\u00a0 24% comes from nuclear, 16% comes from hydroelectric, and another 16% comes from other renewables like wind and solar.<\/p>\n

The company even generates a modest amount of power from bovine emissions.\u00a0 Yes, you read that correctly. \u00a0They harness the methane put off by cow manure.<\/p>\n

Even the company\u2019s more mainstream sources are moderately green.\u00a0 Natural gas, which accounts for 20% of PG&E\u2019s output, is certainly cleaner than coal or petroleum.<\/p>\n

True enough, California\u2019s strict green energy standards have a way of creating energy shortages in the state and driving up costs.\u00a0 There is something to be said for the \u201cmore is better\u201d approach of my native Texas.<\/p>\n

Nevertheless, PG&E has an energy portfolio that even a tie-dyed hippy from Sausalito could approve of.<\/p>\n

PG&E pays a healthy 4.00% in dividends, so investors can enjoy a nice income stream while saving the environment.<\/p>\n

The next company on the list\u2014Japanese auto giant Toyota Motor Company ($<\/span>TM<\/a>)<\/strong>\u2014might be a little bit of a stretch as a \u201cdividend\u201d stock.\u00a0 At current prices, it only yields 1.6%.\u00a0 Still, in a low-yield environment, that\u2019s not half bad and it\u2019s better than the current yield on the 10-year Treasury.<\/p>\n

Toyota makes this list because it is the maker of the Prius, the car that made it \u201ccool\u201d to own a hybrid. For any readers that haven\u2019t had the experience of driving one, the Prius is an impressive piece of engineering, to the point of sounding like something from a science fiction movie.\u00a0 Even the brakes are a high-tech wonder; every time you put your foot on the brake pedal, the kinetic energy that would normally be lost to heat gets recaptured and converted into new power for the car.<\/p>\n

Just a few years ago, I might have thought this was something from a Star Trek episode, but Toyota has made this technology available to the masses.<\/p>\n

Global auto stocks are cheap and out of favor right now, and Toyota is no exception.\u00a0 At current prices it trades for just 9 times expected earnings, 0.49 times sales, and 0.96 times book value.<\/p>\n

Next on the list is operating system and office productivity \u00a0behemoth Microsoft ($<\/span>MSFT<\/a>)<\/strong>.\u00a0\u00a0 I include Microsoft not so much for the company\u2019s social responsibility as for the actions of its iconic founder, Bill Gates.\u00a0 As the founder and co-chair of the Bill and Melinda Gates Foundation, Bill Gates is, in effect, the largest philanthropist in the world and one of the biggest supporters of HIV\/AIDS research.<\/p>\n

One may question some of Gates\u2019 business practices while building Microsoft into its dominant global position, but no one can question that he has decided to make good use of his vast wealth.\u00a0 He\u2019s also acted as an inspiration to other high-profile billionaires, such as Berkshire Hathaway\u2019s ($<\/span>BRK-A<\/a>, $<\/span>BRK-B<\/a>)<\/strong> Warren Buffett. (Berkshire Hathaway would have made this list, by the way, as I consider the company a model corporate citizen.\u00a0 Alas, Mr. Buffett does not pay a dividend.)<\/p>\n

Microsoft pays a respectable dividend at 2.6%, but Microsoft is also one of the fastest dividend growers of any large cap stock anywhere in the world.\u00a0 Microsoft grew its dividend by 25% last year and by 23% the year before.\u00a0 It may not keep up this torrid pace forever, but it is safe to say you won\u2019t find this kind of dividend growth just anywhere.<\/p>\n

And finally, I\u2019ll add American consumer products giant Procter & Gamble ($<\/span>PG<\/a>).<\/strong><\/p>\n

Procter & Gamble makes everything<\/em>.\u00a0 Diapers, laundry detergent, shampoo, razor blades\u2026you name it, they make it.<\/p>\n

The company has made basic necessities affordable for hundreds of millions of people around the world and has improved world sanitation and health. Its Children\u2019s Safe Drinking Water Program has made previously unsafe water drinkable in more than 65 countries and saved tens of thousands of lives.\u00a0 Likewise, through its Live, Learn and Thrive cause, the company claims to have improved the lives of over 300 million children throughout the world with health and educational programs.<\/p>\n

This charitable work is good for business as it builds goodwill and brand loyalty in the emerging markets that are the company\u2019s future.<\/p>\n

Procter & Gamble yields a safe 3.4% in dividends, which makes it one of the highest-yielding stocks for a company its size.<\/p>\n

So, there you have it.\u00a0 I\u2019ve given you five socially responsible stock picks that you can feel good about owning while also getting paid a nice stream of growing dividends.\u00a0 Watch out for Part II, where I\u2019ll offer five delightfully naughty ways to enjoy the same.<\/p>\n

Disclosures: Sizemore Capital is long MSFT, NSRGY and PG <\/em><\/p>\n

Related posts:<\/p>\n