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Tickers in this Article: CMI, FLR, ETR, BDX, HNZ
Most individual investors share an obvious and common goal - they want to make money. However, that doesn't mean that making money is the only goal investors want to accomplish. Many investors are concerned with political and ethical issues as well, and spend a good deal of time and resources in pursuit of these more personal goals.

It should come as no surprise then that investors have carved out a niche strategy within the market known as "socially responsible investing", in order to align their morals with their economic aspirations. (To learn more, check out Change The World One Investment At A Time.)

What Is A Socially Responsible Investment?
Socially responsible investments will differ for each investor according to his or her convictions. One investor may feel there is nothing wrong with a particular company's line of work or business practices, while another may consider the company entirely unethical. While there is no universal set of characteristics that define a socially responsible stock, there are certain themes that tend to be commonly associated with socially responsible investing.

First off, socially responsible investors typically prefer to avoid making investments in companies that engage in the production or sale of alcoholic beverages, tobacco products, gambling or sports betting activities, adult entertainment, and tools of warfare or violence (guns, bullets, bombs, etc.).

As well, socially responsible investors typically seek to invest in companies that possess a healthy amount of environmental responsibility and contribute to environmental sustainability, renewable energy and clean technology. (Some companies may try to appear cleaner just to get your money. Find out more in The Green Marketing Machine.)

Social Responsibility, Indexed
While it is of course a subjective decision to label any one company socially responsible, the Dow Jones Sustainability United States Index provides investors who are interested in making socially responsible investments an easy way to produce a shortlist of companies that are generally regarded as among the most socially responsible public companies. The index is reviewed quarterly, in order to stay up to date with the changing business environment.

This can be particularly useful for individual investors, since researching all the aspects of a large company's operations and business practices in order to rule out the existence of any socially irresponsible activity can be quite time-consuming. In other words, limiting your investment selections to companies listed on an index such as this will likely not create an investment portfolio that perfectly matches all of your political and ethical concerns, but it will ensure that your investment capital goes into companies that are regarded as socially responsible on average compared to most companies.

Responsible But Still Profitable
Investors, however, don't want to suffer losses on their investments, even if they are socially responsible ones. With that in mind, here are five stocks currently listed on the Dow Jones Sustainability United States Index that have produced positive returns over the past year.

Company 12 Mo. Price Change Forward P/E Market Cap. (billion)
52.8% 23 .5
16.6% 17 .92
16.3% 13 .40
Becton Dickinson & Co.
9.82% 18 .81
H.J. Heinz
8.82% 19 .39
Data as of market close July 11, 2008

Cummins Generates Profit

Cummins is a part of the Dow Jones Sustainability United States Index which ranks companies based on social, economic, and environmental developments. The ranking is done primarily by Sustainable Asset Management, a leading independent investment firm specializing in sustainable businesses. The list is then boiled down to top companies in each industry. Cummins is a manufacturer of light and heavy industrial engines primarily for commercial vehicles and power generation. For the quarter ending March 30, 2008, Cummins saw a major increase in quarter over quarter revenues, up 23% to $3.47 billion and net income up 33% to $190 million. That is an increase from 71 cents per common share to 97 cents. The Cummins board of directors announced a 40% increase in dividends to 17.5 cents per share payable to common shareholders on record on August 22. Cash flow looks good with a current ratio of 1.8 and where that cash is coming from looked promising. Fifty-four percent of Cummins full year sales in 2007 came from outside the United States. In the first quarter of 2008 international sales accounted for 57% of revenues.

Wider View With Commodities In Mind
Companies justify buying equipment by looking at its ability to generate income over expected costs. In the past older, used, machines got the job done with a profit. Now, with emission controls and oil prices, gas guzzlers are a less viable income sources and companies start looking for newer more efficient engines. And if that also helps the environment, I'm sure the company won't hesitate to mention it.

What do you think of socially responsible investing, and of Cummins' prospects going forward? Join me (PeterAB) in the FREE Stock Picking Community to share your thoughts and see what other investors are saying.

To learn about two offshoots of the SRI movement, read Extreme Socially Responsible Investing and Working With Islamic Finance.

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