It’s not all about the bottom line anymore.
ESG investing, which stands for environment, social, and governance, is by no means new. However, as more people are made aware of multi-billion dollar companies' ethical, social, and environmental impact, some investors are more inclined to support companies that align with their principles.
To look for ESG companies, you might Google “ESG stocks” or look for reports online. Or, better yet, you can also go to one of the world's most trusted financial data providers and consult the S&P 500 ESG Index.
S&P 500 ESG Index Explained
The S&P 500 ESG is “a broad-based, market-cap-weighted index designed to measure the performance of securities meeting sustainability criteria while maintaining similar overall industry group weights as the S&P 500.”
The index includes companies that score well on the S&P Dow Jones ESG rankings. Of course, the index has some notable exclusions, like companies that are involved in:
- Thermal coal
- Tobacco
- Small arms
- Military contracting
- controversial weapons
- Oil sands
- Companies classified as non-compliant with the United Nations Global Compact (UNGC)
- S&P DJI ESG Scores rank the bottom 25% of companies within the GICS industry groups.
How I Screened For Stocks
It’s no secret that I like dividend stocks, so let’s look at ESG stocks with high yields. To get a list of these stocks, you typically need to get the full list from the S&P 500 ESG site, then create a watchlist and add all companies one at a time. In the wise words of “Sweet Brown” Wilkin, “Ain’t nobody got time for that.”
It’s good that Barchart makes things incredibly easy with its Stock Screener Tool. Let me show you how I did it.
First, go to the Stock Screener page and click the ADD FILTER field. Once there, type INDEX GROUPS, click on it, then click ADD. Once that’s done, a new selection will appear in the FILTER field.
Once there, you can simply put a check next to “S&P 500 ESG”, and you have the full index list. Of course, I added my usual filters to enhance my selection, as follows:
- ANNUAL DIVIDEND YIELD: I left this blank so the dividend yields column will appear in the search. With a few clicks on the column head, I can rearrange them from highest to lowest.
- CURRENT ANALYST RATING: 3.5 to 5, or Moderate Buy to Strong Buy recommendations. For the most part, financial analysts—emphasis on the plural—know what they’re doing and can be generally trusted. (However, that’s no substitute for knowing how to do your due diligence.)
- NUMBER OF ANALYSTS: Set at 16 or more. As alluded to earlier, I like getting consensus data from multiple sources. It makes me more willing to trust the results.
With these filters, I got 203 results. I then took the top three based on dividend yields and arranged them from highest to lowest. Without further ado, here are the highest-yielding buy-rated ESG companies.
Healthpeak Properties (DOC)
The first of two REITs on this list, Healthpeak Properties primarily focuses on healthcare-adjacent properties like hospitals, clinics, laboratories, senior housing, and other medical offices.
Healthpeak has quite a few ESG awards under its belt. Some of these include the Nareit Healthcare Leader in the Light Award (which it has received 10 times), the GRESB Green Star (for 12 years), and the GRESB Global Healthcare Sector Leader award (thrice).
Meanwhile, DOC stock pays 30 cents per share quarterly for 2024. That translates to $1.2 annually, which is a 6.07% yield. If that’s not enough for you, 17 analysts give DOC stock a 4.24 average rating—the highest on this list.
AT&T (T)
AT&T is one of the biggest telecom companies in the United States. The company provides 5G connections and fiber services for faster speeds. AT&T’s wireless network is so comprehensive that it covers more than 99% of Americans.
The company’s corporate guidance leans strongly toward diversity, reducing emissions, enhancing its renewable energy portfolio, and expanding its supplier network.
The company's quarterly payout is $0.2775, which translates to a $1.11 forward rate or a 6.16% yield. Nineteen analysts also give T stock an average score of 4.11, recommending it as a moderate buy.
Boston Properties (BXP)
Boston Properties is one of the largest REITs in the US, owning and operating 53.5 million square feet across 187 properties in top cities like Los Angeles, New York, Washington, DC, Seattle, and Boston.
The company strongly advocates sustainable operations, boasting key highlights such as being on track to become carbon-neutral by 2025 and reducing energy and water consumption by more than 40% since 2008.
Twenty-one analysts rate Boston Properties stock as a moderate buy. The company pays 98 cents quarterly, which is $3.92 annually, translating to an impressive 6.52% yield - making BXP the highest-yielding, buy-rated ESG stock today.
Final Thoughts
A lot of people think that stock investing is all numbers. This current wave of ESG investors proves them wrong by showing that you can invest in stocks and sleep well at night knowing they are investing in ethical and environmentally-aware companies.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
