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Number Cruncher Climate change: These profitable dividend stocks are doing something about it

What are we looking for?

Companies profiting from rising concerns about climate change.

The screen

Even before Dorian – the fifth Category 5 hurricane in the North Atlantic in the past four years – polls suggested a growing number of Canadians and Americans worry about the effects of climate change.

That bodes well for companies that are already thriving and well-placed to further benefit from rising consumer awareness and any shift it brings.

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Our search started with dividend-paying companies whose products and services aim, in some way, to address the climate-change phenomenon while successfully competing on the basis of costs and pricing. From there, we applied our TSI Dividend Sustainability Rating System, awarding points to a stock based on key factors:

  • One point for five years of continuous dividend payments – two points for more than five;
  • Two points if it has raised the payment in the past five years;
  • One point for management’s commitment to dividends;
  • One point for operating in non-cyclical industries;
  • One point for limited exposure to foreign currency rates and freedom from political interference;
  • Two points for a strong balance sheet, including manageable debt and adequate cash;
  • Two points for a long-term record of positive earnings and cash flow sufficient to cover dividend payments;
  • One point if the company is an industry leader.

Companies with 10 to 12 points have the most secure dividends, or the highest sustainability. Those with seven to nine points have above average sustainability; average sustainability, four to six points; and below average sustainability, one to three points.

More about TSI Network

TSI Network is the online home of The Successful Investor Inc. – the group of widely followed Canadian investment newsletters by editor and publisher Pat McKeough. They include our award-winning flagship newsletter, The Successful Investor. The TSI Best ETFs for Canadian Investors is the latest. TSI Network is also affiliated with Successful Investor Wealth Management.

What we found

Our TSI Dividend Sustainability Rating System generated eight stocks. Established and profitable, Ford Motor Co. and Toyota Motor Corp. Ltd. are quickly adopting new technology such as electric vehicles. Johnson Controls International PLC supplies advanced heating, ventilation and air-conditioning systems for energy-efficient buildings. It also makes lithium-ion batteries for hybrid vehicles. Canadian based Innergex Renewable Energy Inc. and Brookfield Renewable Partners LP focus on power generation from hydro-electric, wind and solar. Honeywell International Inc.’s smart energy systems let utilities deliver energy more efficiently. Koninklijke Philips NV of the Netherlands is a global leader in energy-efficient lighting such as LEDs. And finally, Restaurant Brands International Inc. sells plant-based meats at Tim Hortons and Burger King. This cuts methane-gas emissions from cows, a significant source of greenhouse gas.

We advise investors to do additional research on any investments we identify below.

Select dividend stocks with products or services addressing climate change 

Ranking *CompanyTickerDiv. Sustain. RatingPointsDiv. Yield %Mkt. Cap. ($ Bil.) **Recent price ($) **1Y Ttl. Rtn. (% )
1Restaurant Brands Int'l Inc.QSR-TAbove Average92.647.499.1932.4
2Ford Motor Co.F-NAbove Average86.636.39.20-2.9
3Brookfield Renewable PartnersBEP-UN-TAbove Average85.615.449.9224.4
4Toyota Motor Corp. Ltd. (ADR)TM-NAbove Average83.0193,3132.108.3
5Honeywell International Inc.HON-NAbove Average82.0117.7167.144.7
6Koninklijke Philips NV (ADR)PHG-NAbove Average81.743.547.498.0
7Innergex Renewable Energy Inc.INE-TAbove Average74.62.015.2714.2
8Johnson Controls Int'l PLCJCI-NAbove Average72.533.442.4012.3

Source: Dividend Advisor

*Ranking is determined by TSI Dividend Sustainability Score. Where overall points are the same, analysts considered P/E, dividend yield and industry outlook to decide final placements. **Share price and market cap are in USD, except for QSR, BEP-UN and INE, which are in Canadian currency.

Scott Clayton, MBA, is senior analyst for TSI Network and associate editor of TSI Dividend Advisor.

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