Invest In These Four Socially Responsible Stocks

By Investopedia Staff | May 23, 2012 AAA

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 political and ethical goals with their economic aspirations.

Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.

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.

SEE: Extreme Socially Responsible Investing

Social Responsibility, Indexed
While it is of course a subjective decision to label any one company socially responsible or not, 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.

SEE: Ethical Investing: How To Research Ethical Investments

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 four stocks currently listed on the Dow Jones Sustainability United States Index that have produced positive returns over this year.

Company YTD Return
AT&T (NYSE:T) +10.91
Intel (Nasdaq:INTC) +7.34
General Electric (NYSE:GE) +7.09
IBM (NYSE:IBM) +7.04
data as of 5/23/2012

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

comments powered by Disqus
Related Analysis
  1. Investors Buying the Dips - Ahead of Wall Street
    Stock Analysis

    Investors Buying the Dips - Ahead of Wall Street

  2. Q3 Earnings Scorecard as of October 21, 2014 - Earnings Trends
    Stock Analysis

    Q3 Earnings Scorecard as of October 21, 2014 - Earnings Trends

  3. IBM Miss to Set the Tone - Ahead of Wall Street
    Stock Analysis

    IBM Miss to Set the Tone - Ahead of Wall Street

  4. Q3: Not Amazing Nor Disappointing - Ahead of Wall Street
    Stock Analysis

    Q3: Not Amazing Nor Disappointing - Ahead of Wall Street

  5. Is the Earnings Picture Good Enough? - Earnings Trends
    Stock Analysis

    Is the Earnings Picture Good Enough? - Earnings Trends

Trading Center