Looking for socially responsible investments? But you also want to make money (with a clear consciousness?), after making a huge list of dividend paying ethical stocks, I’ve played around and build my own socially responsible dividend portfolio. The goal here was to start from the stock list and use different filters in order to build a diversified and competitive dividend portfolio. I have decided to combine both US and CDN stocks as the CDN list was too short and not diversified enough.


Considerations that I used to build my ethical portfolio


Beside the social aspect of each stock, I tried to pick the strongest companies in term of dividend yields. So here are the factors I have considered to build a socially responsible dividend portfolio:

- Dividend payout over 3% (I have made a few exceptions as I wanted to have a well diversified portfolio)

- Dividend payout ratio under 70% (here again a few exceptions since I wanted to keep 2 more Canadian Banks and other companies that are offering extraoridinary dividend payouts and are solid companies)

- Dividend annualized growth over 5 years over 5% (this time, no exceptions!)

- A good balance between several sectors (we have strong investments in financials, energy and consumer sectors)


Here’s my socially responsible dividend portfolio:


Ticker
Name
INDUSTRY_SUBGROUP
Price
Dividend Yield
5 year dividend growth
Payout Ratio
Country
NANational Bank of CanadaCommer Banks Non-US65.093.817.5950.06CN
BNSBank of Nova ScotiaCommer Banks Non-US52.633.738.2359.21CN
TDToronto-Dominion Bank/TheCommer Banks Non-US72.843.359.0870.27CN
RYRoyal Bank of CanadaCommer Banks Non-US53.13.7711.2277.77CN
HRBH&R Block IncCommercial Serv-Finance12.464.825.6941.09US
PGProcter & Gamble Co/TheCosmetics&Toiletries63.453.0411.5848.84US
CLColgate-Palmolive CoCosmetics&Toiletries76.812.7612.8338US
MMM3M CoDiversified Manufact Op84.242.495.1844.82US
NEENextEra Energy IncElectric-Integrated52.563.817.0247.33US
ETREntergy CorpElectric-Integrated71.994.618.4546.86US
PCGPG&E CorpElectric-Integrated47.273.8514.6841.64US
INTCIntel CorpElectronic Compo-Semicon21.073.4214.5171.23US
KFTKraft Foods IncFood-Misc/Diversified30.343.836.5456.77US
HNZHJ Heinz CoFood-Misc/Diversified47.723.778.2658.04US
CPBCampbell Soup CoFood-Misc/Diversified34.473.199.7844.08US
MDTMedtronic IncMedical Instruments34.172.6319.0329.27US
JNJJohnson & JohnsonMedical Products63.143.4216.8743.42US
ABTAbbott LaboratoriesMedical-Drugs47.663.699.6543.09US
MHPMcGraw-Hill Cos Inc/TheMultimedia35.612.647.5939.4US
WMWaste Management IncNon-hazardous Waste Disp34.833.628.0957.24US
CVXChevron CorpOil Comp-Integrated82.483.4910.1750.55US
COPConocoPhillipsOil Comp-Integrated60.943.6112.7558.3US
TRPTransCanada CorpPipelines364.445.5773.87CN
ENBEnbridge IncPipelines55.443.0710.3835.69CN
TAT&T IncTelephone-Integrated28.245.965.4377.65US

Dividend portfolio highlights:

- 3.63% dividend yield

- 52.2% payout ratio

- 9.84% annualized dividend growth over the past 5 years

- The Portfolio contains 25 stocks at an average price of $50.58. Therefore, you can build this portfolio with roughly $38,000.

- The transaction cost would be around $200 (at $8 per trade), so only 0.50% as a management fee.

- The Portfolio would generate a yearly dividend of $1,390.

- According to past performance, the dividend payout would increase by $136 per year.

- The portfolio includes 4 aristocrat stocks from the list of 2009 (MMM, JNJ, ABT, MHP).

When I first started this series, I was just curious to find out more about social investing. Now, I am glad to see that it is possible to build a strong portfolio that pays dividends and still keep the socially responsible investing aspect in the picture. I wouldn’t say that all these companies are cleaner than snow, but they clearly include socially responsible concerns in their business model.


Further thoughts on Socially Responsible Dividend Portfolio


Next Monday, I’ll finish this social investing series with my final thoughts on this topic. I want to know if by including the ethical factor in an investment strategy, we make more, less or it doesn’t make a difference at the end of the day. What do you think? Do you think that the sustainable aspect of social investing can play a role in a long term investment strategy?


holding disclaimer: I currently have National Bank (NA) in my portfolio.

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11 Comments   |  

11 Comments

November 24, 2010, 9:06 pm

[...] This post was mentioned on Twitter by Green_Panda and TheFinancialBlogger, TheDividendGuy. TheDividendGuy said: RT @financialblogr: RT @TheDividendGuy Socially Responsible Dividend Portfolio http://bit.ly/eZcBWg [...]

November 25, 2010, 7:59 am

Some interesting choices.

Did you dig deep into some of these companies? e.g. make sure JNJ, PG and CL and ABT don’t test on animals? That KFT, HNZ and CPB are making a concerted effort to reduce the sodium and other nasties in their processed massively foods?

The term “socially responsible” is somewhat abused, imo, when it comes to designating companies as such.

Did you take a look at EEI and TA? While they may not meet the specific metrics by which you did your analysis, both are decent dividend payers that maintain businesses that, again in my opinion, are profiting from ACTING socially responsible (EEI is an environmental assessment/consulting company and TA produces a ton of green energy).

Anyhow – look forward to the next post! Your series will be included in our very first weekly roundup for sure!

November 26, 2010, 5:38 am

Intersting questions! I actually outline that fact that it is hard to have all the info and make sure that you are truly picking SRI stocks in my last post.

I think it’s hard to determine where you draw the line and it is even harder to make sure that the companies you have selected are not crossing it by any means!

The Dividend yield was not high enough on EEI and TA to get retained in my portfolio. I have taken in consideration most stocks with a 3%+ div yield.

cheers,

Mike

November 27, 2010, 5:02 am

[...] -Socially responsible dividend portfolio @ TheDividendGuyBlog -Please Santa, let this be the last Christmas where… @ The Big Picture -The Federal reserve’s Visa statement @ Zero Hedge -The Beginning of the End @ Macro Man -November Net worth update @ TheFinancialBlogger -Henry Blodget talks sense @ CanadianCapitalist -Apple sold 2 million songs from the Beatles @ Business Insider -If you don’t have a will, you will have problems @ DoNotWait -Thoughts on GM IPO @ Balance Junkie -The 80/20 rule applied to the CFA @ SmartFinancialAnalyst -Think long term when shopping black friday and cyber Monday @ Free From Broke -Why are inflation and deflation important @ Momvesting -6 new volatility ETF’s @ Vix and more [...]

November 28, 2010, 1:32 am

[...] The Dividend Guy presented Socially Responsible Dividend Portfolio [...]

Ty Webb
November 28, 2010, 3:12 pm

I don’t know how socially responsible RY is as they are the largest financier of the environmentally disastrous Alberta tar sands.

Mike
November 29, 2010, 11:46 am

@Ty,

good point, this is the kind of reflection that leads me to my conclusion (Nov 29th post). it’s hard to draw the line!

December 4, 2010, 5:56 am

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February 14, 2011, 10:34 pm

[...] Dividend Guy blog has some socially responsible posts for dividend [...]

Pascal
September 28, 2012, 7:14 am

I was very excited to see a Socially Responsible portfolio. But how in the world is Chevron and Conoco Phillips on this list? Enbridge? TransCanada? What is socially responsible about oil companies exactly? They’re the biggest evil in the corporate world (next to banks).

I could probably pick on your other choices as well but come on, you lost all credibility with these ones right from the start.

Mike
September 28, 2012, 8:02 am

Hello Pascal,

I understand your deception. but as funny as it seems, I’ve used reputable Sustainable indexes to start my stock picking. I was surprised to see those companies being part of all sustainable indexes… I guess they are pretty lose on their criterion.

I think you can find evil in all companies after all!

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