The Social Responsibility Dividend Investor

by: Richard Shaw

Some investors have a commitment to "doing well by doing good." As such, they often want to invest their money in companies that are socially and environmentally responsible in their operations.


To come up with a responsible investing, high quality, bullishly rated, dividend stock list, we filtered this way:

  • dividend yield >= 3%
  • 5-year dividend growth rate >= 3%
  • S&P earnings and dividend quality >= B+
  • S&P Stars for year ahead >=3 (of 5)
  • ThompsonReuters StarMine rating for year ahead = Bullish or Very Bullish
  • MSCI Environmental, Social and Governance rating = Green or Yellow (on a Green, Yellow, Red scale)
  • GMI Accounting and Governance Risk = Average or Conservative (not Aggressive or Very Aggressive)


  • MDP: Merideth Corp (4.5% yield)
  • SYY: Sysco Corp. (3.6% yield)
  • CAG: Conagra (3.2% yield)
  • MCD: McDonalds (3.4% yield)
  • PEP: Pepsico (3.0% yield)
  • SPLS: Staples (3.6% yield)

We are not providing an opinion on any of these stocks, just performing a filter to see what comes out. You will have to decide if any of these make sense or are suitable for you.

We own MCD and PEP in our portfolios, but they were not chosen based on responsibility investing criteria.


Here is how the two responsibility rating services describe their approaches.


The Five ESG (Environmental, Social and Governance) Stakeholder Categories
To measure each company's ESG performance, the ESG Analytics team looks at each firm's impact on five categories of stakeholders.

  • Environment: The ratings criteria for Environment cover a company's management of its environmental challenges, including its efforts to reduce or offset the impact of its products and operations.
  • Community And Society: Community and Society ratings criteria measure how well a company manages its impact on the communities where it operates, including its treatment of local populations, its handling of human rights issues and its commitment to charitable giving.
  • Employees And Supply Chain Employees and Supply Chain ratings criteria assess a company's record in managing its employees, contractors and suppliers. Issues of particular concern include labor-management relations, anti-discrimination policies and practices, employee safety and the labor rights of workers throughout the company supply chain.
  • Customers The ratings criteria for Customers measure the quality and safety record of a company's products, its marketing practices, and its involvement in anti-competitive controversies.
  • Governance & Ethics Governance & Ethics ratings criteria address a company's investor relations and management practices, including company sustainability reporting, board accountability and business ethics programs.


Accounting and Governance Risk Ratings ... range from 0 to 100, which correspond to a risk rating for each company ranging from "Very Aggressive" to "Conservative." Effectively, all companies start with a perfect score of 100, and get points deducted for every failed accounting and governance test.

The AGR tests have been designed based on an extensive statistical review of SEC fraud cases - i.e., they have been found to be predictive of fraud or financial manipulation.

Through continued back-testing, GMI has demonstrated a strong correlation between its quarterly ... ratings and the likelihood of adverse events, including securities class action litigation, financial restatements, regulatory enforcement actions and stock price declines. ... companies that have a "Very Aggressive" AGR have a higher risk probability of facing negative events when compared to "Conservative" rated companies.

Disclosure: QVM has positions in MCD and PEP as of the creation date of this article (January 16, 2012). We certify that except as cited herein, this is our work product. We received no compensation or other inducement from any party to produce this article, but are compensated retroactively by Seeking Alpha based on readership of this specific article.

General Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. Do your own research or obtain suitable personal advice. You are responsible for your own investment decisions. This article is presented subject to our full disclaimer found on the QVM site available here.