Caveat: I am not an investment advisor, and the information here is not intended as investment advice. I’m just telling you what I heard about some companies and their stocks.
Enron’s Story = Stocks are Scary
The more I learn about huge companies and their stocks, the less I want my retirement savings to be broadly invested in the market. Recently we saw two films — Enron: The Smartest Guys in the Room and Inside Job — that showed just how evil and greedy traders and executives can be. More disturbingly, the accountants, lawyers and regulators who are supposed to keep corporations in check are often corrupt, too.
The Enron story was especially disgusting – how the whole organization lied for years, going so far as to put the state of California in an acute energy crisis, just to keep their stock price up and make themselves ever richer. All the big banks were greedy participants in their fraud as well. As Matt Taibibi put it, these corporations are like a “giant vampire squid” sucking money out of our pockets through manipulated electricity bills and bad mortgage loans. Totally unsustainable. And how much of the S&P 500 consists of companies like that? I shudder to think.
But I’ve got to have my 401K retirement funds in something, right? Preferably something that will keep my savings growing at the rate of inflation at a minimum. This is why dividend stocks have piqued my interest.
These are stocks in companies that pay you a cash dividend every quarter for each share of stock you own. As Joseph Khattab put it, the fact that a company can afford to pay cash dividends to investors is a good sign that in that company, “real goods and services are being provided to real customers.” At Enron, they were just manipulating their accounting reports. They didn’t pay dividends and couldn’t have, because they weren’t actually bringing in any cash.
Why People Like Dividend Stocks
I’m not alone in liking dividend stocks. Anyone who can compare the dividend percentages with the paltry interest available on most savings accounts can see the appeal. And Warren Buffet likes them, too. Thestreet.com periodically lists his favorites in horrible articles riddled with click-bait. Don’t read them — I’ll save you the trouble with my synopsis and critique here. Buffet likes big, mainstream retail companies like Walmart, Coca-Cola, AT&T, Proctor & Gamble, and General Motors. Personally, I’m not a fan of folks who make GMO-sugar calorie bombs, SUVs, and toilet paper made directly from trees. And pay their workers abysmally.
So here’s my alternative list of more sustainability-friendly companies that pay dividends. Again, this is just information, not advice:
- Waste Management (WM), North America’s largest residential recycler, is at the forefront of waste-to-fuel processing for making oil and coal substitutes from plastics and other waste. WM runs its fleet of trucks on renewable natural gas that they capture from their Altamont Landfill in CA. Current dividend yield: 2.42%.
- Republic Services (RSG) is another big waste management / recycling company that also uses landfill gas and pays a similar dividend (2.30% yield).
- NextEra Energy Partners (NEE) is an electric company that uses a diversified set of energy sources to make electricity. They’ve recently bought more wind farms and have been raising their dividends steadily despite lower oil prices. This article discusses other options in the alternative energy sector. Current dividend yield: 2.73%.
- Apple (AAPL) has gotten bad press about its factory conditions and may not be the most sustainable phone company one could hope for (that is probably Fairphone). But it has undertaken some large sustainability goals recently, and many of us enjoy their products. Current dividend yield: 2.34%.
- OK, this is item 4a. Labor practices are important, so I’ve considered Costco (COST) as an alternative to Apple. I hate that they sell apples in huge plastic clamshell containers and have no recycled toilet tissue in their stores. But they do promote buying in bulk. And their employees are their first priority, which seems to be a rarity in the world these days. Buy or don’t buy their stock — your call — but do fill out comment cards demanding recycled TP if you go their stores! Current dividend yield: 1.08%.
- Unilever (UL) is one I wanted to share here, though at the moment I don’t buy any of their brands (which include Dove, Hellmann’s, Knorr, Lipton and others). Here’s the thing — not everyone can or will buy super organic, local stuff. But investing in the small companies making super organic, local items is risky and difficult. So while I may not buy Unilever’s soap or tea, I applaud their goals of cutting their environmental impact in half by 2030 while continuing to grow. Recently, they have become leaders in an effort to try to engage multinational corporations in the B-corp movement, which to me is a great sign. Current dividend yield: 3.09%
Bryony AngellAugust 4, 2016 at 9:07 am
Great post, and I totally agree with you about Unilever. They are mainstreaming a lot of really good practices as you say in your piece, and one that really impresses me is their support of sustainable palm oil production.