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13 Best Environmental Dividend Stocks To Invest In According To Analysts

In this article, we discuss 13 best environmental dividend stocks to invest in according to analysts. You can skip our detailed analysis of ESG investing and its prospects, and go directly to read 5 Best Environmental Dividend Stocks To Invest In According To Analysts

Sustainable investing, increasingly gaining traction among investors, represents a pivotal shift in financial markets towards aligning profit motives with environmental, social, and governance (ESG) considerations. A growing number of individuals are becoming attracted to ESG investments for a variety of reasons, ranging from ethical concerns to sound financial decision-making. As per research conducted by deVere Group, over 800 clients revealed that more than half (56%) of investors expressed their intentions to boost their investments in ESG funds in 2024.

Despite the increasing popularity of ESG investing, the year 2023 did not fare well for such investment strategies. Investors persisted in withdrawing their investments from sustainable funds during the fourth quarter of 2023. U.S. sustainable funds experienced their initial year of outflows since records began over a decade ago, marking 2023 as their most challenging year to date, according to a report by Morningstar. In the fourth quarter alone, investors withdrew $5 billion from U.S. sustainable funds, contributing to a total outflow of $13 billion throughout the year. This trend was attributed to underperformance, ongoing political scrutiny in the US, and a challenging year for an iShares fund. Moreover, by the end of 2023, the total assets invested in sustainable funds reached $323 billion. This figure indicates a drop of approximately 12% from the previous record high recorded at the end of 2021. However, it also signifies an 18% increase from the lowest point observed in the third quarter of 2022. In contrast, assets within the broader U.S. funds market reached their peak at the end of 2021 but experienced a decline of 5% by the end of 2023.

That said, analysts are optimistic about the potential of ESG investing in the foreseeable future. Based on a study conducted by Bloomberg Intelligence, global ESG assets are projected to surpass $53 trillion by 2025, constituting more than a third of the estimated total assets under management of $140.5 trillion. The convergence of factors including the pandemic and the green recovery initiatives in major economies such as the U.S., EU, and China is expected to demonstrate the efficacy of ESG in evaluating a fresh array of financial risks and leveraging capital markets.

As discussed previously, there is a growing trend among investors towards ESG investing, primarily due to the reputation of these assets for delivering consistent returns. Contrary to concerns regarding potential conflicts between financial gains and ESG principles, a survey conducted by PwC revealed that nine out of ten asset managers believe that incorporating ESG criteria into their investment approach will enhance overall returns. Moreover, a majority of institutional investors, accounting for 60%, reported experiencing higher performance yields from ESG investments compared to non-ESG alternatives. The survey also noted that investors are willing to pay for ESG performance, as they anticipate the potential for higher returns. Specifically, three-quarters of those surveyed, constituting 78%, expressed their readiness to pay elevated fees for ESG funds.

American Tower Corporation (NYSE:AMT), AT&T Inc. (NYSE:T), and Albemarle Corporation (NYSE:ALB) are some of the best companies in the realm of ESG investing. Beyond their financial success, the companies demonstrate a commitment to environmental sustainability by optimizing their operations to minimize energy consumption and carbon footprint. In this article, we will discuss some of the best environmental dividend stocks according to analysts.

Chinnapong/Shutterstock.com

Our Methodology:

For this list, we scanned the holdings of Vanguard ESG U.S. Stock ETF, which is a market capitalization-weighted index composed of large-, mid-, and small-cap stocks of companies located in the United States that are screened for certain environmental, social, and corporate governance (ESG) criteria by the index provider, which is independent of Vanguard. From the index, we picked 13 stocks that pay dividends and have a projected upside potential of over 15% based on analyst price targets. The stocks are ranked according to their upside potential, as of February 23. We have also mentioned hedge fund sentiment for these stocks. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.

13. S&P Global Inc. (NYSE:SPGI)

Upside Potential as of February 23: 15.2%

S&P Global Inc. (NYSE:SPGI) is a leading provider of financial market intelligence, including credit ratings, indices, data, and analytics. The company is actively involved in ESG investing both through its own corporate practices and by providing data, analytics, and research to support ESG investing initiatives in the broader financial community.

S&P Global Inc. (NYSE:SPGI) currently offers a quarterly dividend of $0.91 per share, having raised it by 1.1% in January this year. Through this increase, the company stretched its annual dividend growth streak to 51 years, which makes SPGI one of the best dividend stocks on our list. The stock’s dividend yield on February 23 came in at 0.83%.

The number of hedge funds tracked by Insider Monkey owning stakes in S&P Global Inc. (NYSE:SPGI) grew to 82 in Q4 2023, from 78 in the previous quarter. The collective value of these stakes is over $8.88 billion. With over 9 million shares, TCI Fund Management was the company’s leading stakeholder in Q4.

12. Pfizer Inc. (NYSE:PFE)

Upside Potential as of February 23: 15.4%

An American biotech and pharmaceutical company, Pfizer Inc. (NYSE:PFE) has committed to reducing its environmental impact by setting targets to decrease greenhouse gas emissions, water usage, and waste generation. The company invests in energy-efficient technologies, sustainable packaging, and renewable energy sources to mitigate its environmental footprint.

Pfizer Inc. (NYSE:PFE) is one of the best environmental dividend stocks on our list as the company has been rewarding shareholders with growing dividends for the past 14 consecutive years. The company offers a quarterly dividend of $0.42 per share and has a dividend yield of 6.05%, as recorded on February 23.

At the end of Q4 2023, 79 hedge funds tracked by Insider Monkey reported having stakes in Pfizer Inc. (NYSE:PFE), growing from 73 in the preceding quarter. The consolidated value of these stakes is more than $2.21 billion.

11. Mid-America Apartment Communities, Inc. (NYSE:MAA)

Upside Potential as of February 23: 15.9%

Mid-America Apartment Communities, Inc. (NYSE:MAA) is a real estate investment trust company that focuses on the acquisition, development, redevelopment, and management of multifamily apartment communities. It invests in in energy-efficient appliances, lighting, and HVAC systems, as well as implement recycling programs and landscaping practices that minimize water usage and promote biodiversity. The company offers a quarterly dividend of $1.47 per share, having raised it by 5% in December 2023. This was the company’s 13th consecutive year of dividend growth, which makes MAA one of the best environmental dividend stocks to buy. As of February 23, the stock has a dividend yield of 4.65%.

As of the close of Q4 2023, 23 hedge funds in Insider Monkey’s database owned stakes in Mid-America Apartment Communities, Inc. (NYSE:MAA), up from 19 in the previous quarter. These stakes have a total value of more than $524.3 million. Among these hedge funds, Balyasny Asset Management was the company’s leading stakeholder in Q4.

10. Morgan Stanley (NYSE:MS)

Upside Potential as of February 23: 16.4%

Morgan Stanley (NYSE:MS) is a global financial services firm that provides a wide range of related services to its consumers. The company offers a range of ESG-focused investment products and solutions to meet the growing demand from clients who seek to align their investments with their values.

Morgan Stanley (NYSE:MS), one of the best dividend stocks on our list, has been rewarding shareholders with regular dividends since 1997. It currently offers a quarterly dividend of $0.85 per share and has a dividend yield of 3.93%, as of Februart 23.

Morgan Stanley (NYSE:MS) was a part of 56 hedge fund portfolios at the end of Q4 2023, compared with 59 in the previous quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $2.72 billion.

9. Becton, Dickinson and Company (NYSE:BDX)

Upside Potential as of February 23: 16.5%

Becton, Dickinson and Company (NYSE:BDX) is a global medical technology company that specializes in the development, manufacturing, and sale of medical devices, instrument systems, and reagents. The company adheres to stringent regulatory standards and quality management systems to ensure the safety and reliability of its medical devices, instruments, and reagents. This commitment to product safety aligns with ESG principles and contributes to positive health outcomes for patients.

On January 23, Becton, Dickinson and Company (NYSE:BDX) declared a quarterly dividend of $0.95 per share, which was in line with its previous dividend. Overall, the company holds a 52-year streak of consistent dividend growth, which makes BDX one of the best environmental dividend stocks on our list. The stock’s dividend yield on February 23 came in at 1.54%.

At the end of December 2023, 60 hedge funds tracked by Insider Monkey reported having stakes in Becton, Dickinson and Company (NYSE:BDX), which showed growth from 57 in the previous quarter. The collective value of these stakes is over $2.57 billion.

8. Realty Income Corporation (NYSE:O)

Upside Potential as of February 23: 16.69%

With an upside potential of nearly 17%, Realty Income Corporation (NYSE:O) is next on our list of the best dividend stocks. The American real estate investment trust company has been paying regular dividends to shareholders for the past 104 consecutive quarters. Moreover, it has raised its payouts for 29 years in a row. It currently pays a monthly dividend of $0.2565 per share and has a dividend yield of 5.81%, as of February 23.

Realty Income Corporation (NYSE:O) is equally dedicated to conducting its business activities in a manner that respects and preserves the environment. As a publicly traded company, it recognizes its corporate responsibilities and strives to fulfill them for the betterment of our stakeholders, which include our shareholders, employees, and the communities we serve.

Insider Monkey’s database of Q4 2023 indicated that 28 hedge funds owned stakes in Realty Income Corporation (NYSE:O), up from 23 in the previous quarter. The total value of these stakes is over $332.5 million. Among these hedge funds, Millennium Management was the company’s largest stakeholder in Q4.

7. Microsoft Corporation (NASDAQ:MSFT)

Upside Potential as of February 23: 16.8%

An American multinational tech company, Microsoft Corporation (NASDAQ:MSFT) is dedicated to environmental sustainability and has set ambitious goals to reduce its carbon footprint and achieve carbon neutrality. Currently, the company pays a quarterly dividend of $0.75 per share and has a dividend yield of 0.73%, as of February 23. It is one of the best dividend stocks on our list as the company holds an 11-year streak of consistent dividend growth.

According to Insider Monkey’s database of Q4 2023, 302 hedge funds in Insider Monkey’s database owned stakes in Microsoft Corporation (NASDAQ:MSFT), compared with 306 in the previous quarter. These stakes have a total value of over $87.3 billion.

6. Archer-Daniels-Midland Company (NYSE:ADM)

Upside Potential as of February 23: 17.04%

Archer-Daniels-Midland Company (NYSE:ADM) ranks sixth on our list of the best environmental dividend stocks. The global food processing and commodities trading company recently achieved its 51st consecutive annual dividend growth. It currently pays a quarterly dividend of $0.50 per share and has a dividend yield of 3.74%, as of February 23.

Archer-Daniels-Midland Company (NYSE:ADM) prioritizes sustainable sourcing of raw materials, including agricultural commodities such as soybeans, corn, and wheat. The company works with farmers and suppliers to promote sustainable agricultural practices, responsible land management, and biodiversity conservation.

At the end of the fourth quarter of 2023, 34 hedge funds tracked by Insider Monkey reported having stakes in Archer-Daniels-Midland Company (NYSE:ADM), compared with 37 in the previous quarter. These stakes are collectively valued at nearly $820 million.

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Disclosure. None. 13 Best Environmental Dividend Stocks To Invest In According To Analysts is originally published on Insider Monkey.

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