Many investors want to make the world better while also making money. That leads us to ESG dividend stocks. These holdings fit the environmental, sustainable, and governance “ESG” framework required to be a company in good ethical standing. However, the dividend component of many ESG investments ensures that shareholders are also regularly rewarded for their investments in these firms.
It’s easy to think of ESG stocks primarily being directly in high-tech areas such as electric vehicles, solar panels, etc. But many of the benefits of ESG investing come from re-thinking approaches to traditionally “dirtier” industries.
For example, these three socially responsible companies have helped chart a more sustainably green approach to industries as diverse as sanitation, paper products, and telecommunications. Let’s dive in.
Ecolab (NYSE:ECL) is the world’s most extensive sanitation and hygiene company. It helps firms like hotels, restaurants, factories, and so on maintain clean operating environments, manage their chemical needs, handle pest eradication, and manage their water cleaning and treatment needs.
This may seem like an anodyne business. But Ecolab has been tremendously successful thanks to its constant mergers and acquisitions, which have built it into the unrivaled global powerhouse within its industry. ECL stock rose from $5 thirty years ago to $165 now on the strength of this tried-and-true business model.
And today, Ecolab’s scale allows it to pursue more ambitious climate efforts. Ecolab’s CEO, Christophe Beck, is an evangelist on water scarcity and states: “Any meaningful effort to combat climate change will require companies to address one especially vital resource – water. It is more important than ever for the industry to turn commitments into tangible action and results.”
Specifically, Ecolab offers its customers a win-win solution. It helps its clients, such as large factories or resource processing facilities, to reduce their water usage by a set amount or to recycle more of their spent water. The client gets to improve their ESG scores and climate impact, while providing Ecolab additional business.
Ecolab has seen tremendous growth in its water business, and should profit for years to come, as companies seek to improve their water usage standards further. Ecolab also showers its investors with these profits. Impressively, the company has increased its dividend 31 years in a row.
Kimberly-Clark (NYSE:KMB) is a perfect example of a business that can make an impact in a traditionally polluting industry. The firm makes a wide range of paper products and toiletries, and as such, it consumes vast amounts of wood pulp, chemicals, plastics, and electricity.
And yet, Kimberly-Clark has made aggressive strides on most of these fronts, to reduce its impact and make its products more sustainable. Kimberly-Clark, for example, was the first company to launch toilet paper 100% made out of bamboo fiber. This has a positive environmental impact, since bamboo grows far more quickly than traditional lumber and can thus spare a great deal of forest while allowing for the production of this vital consumer product.
Overall, Kimberly-Clark aims to reduce its environmental footprint by 50% over by 2030. A reduction of this magnitude would make a big difference for a firm that uses so many natural resource-based inputs.
The firm is already being recognized for its strides in recent years. Barron’s recently tabbed Kimberly-Clark as the third most sustainable enterprise on its list of 100 companies leading the ESG revolution.
Kimberly-Clark also takes care of its shareholders. The firm has grown its annual dividend for decades, and shares yield 3.4% today. Meanwhile, the stock price has been roughly flat since 2020, offering a decent entry point for ESG dividend stock investors today.
Verizon Communications (VZ)
Verizon Communications (NYSE:VZ) is well-known for its strong profitability. The company earns tremendous sums from its telecom business and returns a significant portion to shareholders via its generous 6.6% dividend yield.
However, there is an admirable sustainability angle to Verizon as well. For one thing, Verizon has invested tens of billions of dollars in cutting-edge telecom infrastructure, such as 5G. This has given more people access to high-speed internet capable of powering remote work, live video conferences, etc.
To that end, Verizon estimates that its telecom solutions helped take nearly 3.3 million cars off the road last year. To the extent people work from home rather than commuting to and from a large office, Verizon’s telecom solutions help fight climate change by stopping commuting-related emissions before they happen.
Verizon is also responsible for its actions. For example, it is one of America’s largest renewable power consumers, with contracts for a whopping 3.3 gigawatts. All this adds up to Verizon offering a hefty dividend, while providing an increasingly positive impact on the broader community.
On the date of publication, Ian Bezek held a long position in ECL and VZ stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.