20 Mega-Cap Stocks With Strong Corporate Governance

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Includes: BAC, C, CAT, CSCO, HD, INTC, JPM, KO, MDLZ, MMM, MO, PEP, PFE, PM, SLB, UNH, UPS, UTX, VZ, WFC
by: Kapitall

It’s important to remember that stocks represent ownership interests in companies run by real management teams. How well a company is run has big implications to its profitability and its ability to maintain a dividend yield.

One way to evaluate this is by looking at the corporate governance policies of the company, such as its board composition and shareholder rights.

Institutional Shareholder Services (ISS) gives ratings for four areas of corporate governance, on risks related to: the board, the audit committee, the compensation committee, and shareholder rights.

We ran a screen on the 200 largest stocks by market cap for those receiving “low risk” ratings in all four corporate governance categories from ISS.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.‬

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.


(Click to enlarge)

Do you think these companies are being run well? Use this list as a starting point for your own analysis.

List sorted by market cap.

1. Pfizer Inc. (NYSE:PFE): A biopharmaceutical company, offers prescription medicines for humans and animals worldwide. Market cap of $152.51B. According to ISS, the company has "low concern" in all corporate governance categories. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 4.03%, current ratio at 2.25, and quick ratio at 1.95. The stock has gained 23% over the last year.

2. The Coca-Cola Company (NYSE:KO): Distributes, and markets nonalcoholic beverages worldwide. Market cap of $150.61B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 6.62% over the last year.

3. Wells Fargo & Company (NYSE:WFC): Provides retail, commercial, and corporate banking services primarily in the United States. Market cap of $141.01B. According to ISS, the company has "low concern" in all corporate governance categories. Might be undervalued at current levels, with a PEG ratio at 0.84, and P/FCF ratio at 4.58. The stock has had a couple of great days, gaining 10.72% over the last week.

4. Philip Morris International, Inc. (NYSE:PM): Engages in the manufacture and sale of cigarettes and other tobacco products in markets outside of the United States. Market cap of $131.78B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 35.22% over the last year.

5. Intel Corporation (NASDAQ:INTC): Engages in the design, manufacture, and sale of integrated circuits for computing and communications industries worldwide. Market cap of $127.35B. According to ISS, the company has "low concern" in all corporate governance categories. Offers a good dividend, and appears to have good liquidity to back it up--dividend yield at 3.36%, current ratio at 2.24, and quick ratio at 1.91. The stock has had a couple of great days, gaining 6.61% over the last week.

6. JPMorgan Chase & Co. (NYSE:JPM): Provides various financial services worldwide. Market cap of $127.33B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has had a couple of great days, gaining 14.92% over the last week.

7. Verizon Communications Inc. (NYSE:VZ): Provides communication services. Market cap of $107.72B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 21.96% over the last year.

8. Schlumberger Limited (NYSE:SLB): Supplies technology, integrated project management, and information solutions to the oil and gas exploration and production industries worldwide. Market cap of $103.55B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has had a couple of great days, gaining 11.86% over the last week.

9. Cisco Systems, Inc. (NASDAQ:CSCO): Designs, manufactures, and sells Internet protocol (NYSE:IP)-based networking and other products related to the communications and information technology industry worldwide. Market cap of $101.01B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has lost 2.19% over the last year.

10. Pepsico, Inc. (NYSE:PEP): Engages in the manufacture, marketing, and sale of foods, snacks, and carbonated and non-carbonated beverages worldwide. Market cap of $100.68B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 2.63% over the last year.

11. Citigroup, Inc. (NYSE:C): Provides consumers, corporations, governments, and institutions with a range of financial products and services. Market cap of $87.21B. According to ISS, the company has "low concern" in all corporate governance categories. This is a risky stock that is significantly more volatile than the overall market (beta = 2.54). Might be undervalued at current levels, with a PEG ratio at 0.76, and P/FCF ratio at 2.13. The stock has had a couple of great days, gaining 19.08% over the last week.

12. United Technologies Corp. (NYSE:UTX): Provides technology products and services to the building systems and aerospace industries worldwide. Market cap of $69.44B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 0.04% over the last year.

13. United Parcel Service, Inc. (NYSE:UPS): Provides transportation, logistics, and financial services in the United States and internationally. Market cap of $69.43B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has had a couple of great days, gaining 5.44% over the last week.

14. Kraft Foods Inc. (KFT): Manufactures and markets packaged food products worldwide. Market cap of $64.50B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 24.86% over the last year.

15. Caterpillar Inc. (NYSE:CAT): Manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives worldwide. Market cap of $62.63B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has had a couple of great days, gaining 5.87% over the last week.

16. The Home Depot, Inc. (NYSE:HD): Operates as a home improvement retailer. Market cap of $62.02B. According to ISS, the company has "low concern" in all corporate governance categories. Exhibiting strong upside momentum--currently trading 7.13% above its SMA20, 12.53% above its SMA50, and 14.64% above its SMA200. The stock has had a couple of great days, gaining 8.7% over the last week.

17. Bank of America Corporation (NYSE:BAC): Provides banking and financial services to individuals, small- and middle-market businesses, corporations, and governments primarily in the United States and internationally. Market cap of $58.75B. According to ISS, the company has "low concern" in all corporate governance categories. This is a risky stock that is significantly more volatile than the overall market (beta = 2.2). The stock has had a couple of great days, gaining 10.5% over the last week.

18. Altria Group Inc. (NYSE:MO): Engages in the manufacture and sale of cigarettes, smokeless products, and wine in the United States and internationally. Market cap of $58.03B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has gained 24.59% over the last year.

19. 3M Co. (NYSE:MMM): Operates as a diversified technology company worldwide. Market cap of $56.72B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has lost 4.43% over the last year.

20. Unitedhealth Group, Inc. (NYSE:UNH): Provides healthcare services in the United States. Market cap of $51.46B. According to ISS, the company has "low concern" in all corporate governance categories. The stock has had a couple of great days, gaining 7.2% over the last week.

*ISS ratings sourced from Yahoo! Finance, all other data sourced from Finviz.

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