10 Stocks With a Conscience

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Includes: ADBE, AFL, BBY, CSCO, DNB, GPS, HIG, MSFT, TXN, XRX
by: MyPlanIQ

As the News Corp. (NASDAQ:NWS) scandal continues to blaze across two continents, we are reminded that there is a sad line of companies that appeared to be doing well but there was something rotten underneath that eventually rose to the surface.

As a contrast, Andrew Tonner picks 10 stocks listed by the global think tank Ethisphere, which publishes an annual list of what it considers to be the most ethical companies. Companies receive their ratings based on their overall score in four categories: Ethics and compliance programs; reputation, leadership, and innovation; governance; and corporate citizenship and responsibility.

His point is that since 2007, the companies making Ethisphere's list have beaten the market, declining less than the S&P 500 as the world imploded in 2008 and leaving it in the dust on its way up since then. He picks 10 from the list that are a great price.

  • Gap (NYSE:GPS)
  • Dun & Bradstreet (NYSE:DNB)
  • Adobe Systems (NASDAQ:ADBE)
  • Microsoft (NASDAQ:MSFT)
  • Xerox (NYSE:XRX)
  • Texas Instruments (NYSE:TXN)
  • Hartford Financial Services (NYSE:HIG)
  • Aflac (NYSE:AFL)
  • Best Buy (NYSE:BBY)
  • Cisco (NASDAQ:CSCO)

This is a novel way of selecting companies and there is something good about investing into ethical companies. The question is whether you are rewarded by this stance financially.

We will compare this with our reference ETF dividend portfolio, which is blind in the sense that it invests in the whole market and focuses neither on saints nor sinners.

Asset Fund in this portfolio
REAL ESTATE ICF (iShares Cohen & Steers Realty Majors)
CASH CASH
FIXED INCOME TIP (iShares Barclays TIPS Bond)
Emerging Market VWO (Vanguard Emerging Markets Stock ETF)
US EQUITY DVY (iShares Dow Jones Select Dividend Index)
US EQUITY VIG (Vanguard Dividend Appreciation ETF)
INTERNATIONAL EQUITY IDV (iShares Dow Jones Intl Select Div Idx)
High Yield Bond HYG (iShares iBoxx $ High Yield Corporate Bd)
INTERNATIONAL BONDS EMB (iShares JPMorgan USD Emerg Markets Bond)
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Portfolio Performance Comparison
Portfolio/Fund Name 1Yr AR 1Yr Sharpe 3Yr AR 3Yr Sharpe 5Yr AR 5Yr Sharpe
10 Stocks With a Conscience 1% 8% -6% -18% -1% -6%
Retirement Income ETFs Strategic Asset Allocation Moderate 17% 155% 6% 33% 5% 27%
Retirement Income ETFs Tactical Asset Allocation Moderate 14% 155% 12% 93% 11% 79%
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Three-Month Chart (click all to enlarge) One Year Chart Three-Year Chart Five-Year Chart

Full details

Sadly, this portfolio has not performed well. One would like to think that ethical companies would perform well as they meet all the standards of governance as well as social responsibility. We will continue to look for other selections of ethical companies but this is not a selection that can be recommended.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.