In May of 2012 Kapitall interviewed Richard Rudden, Managing Partner of Target Rock Advisors. He highlighted the rapid increase of dollars invested in socially responsible firms and suggested utility stocks are a logical and profitable place for socially responsible investors.
"Utilities are rarely considered candidates for the large and rapidly growing number of socially responsible investing funds," Rudden had said, “but we want to call attention to the industry for people looking for more income producing steady growth in their portfolio.”
To that end, his firm creates unique sustainability utility indexes ranked by environmental stewardship, economic performance and societal contribution. Together their “triple bottom line” approach has led to some impressive index results with strong payouts, average earnings growth, and names that consistently grow or maintain their dividends.
Target Rock's high-sustainability index, listed here returned an impressive average 13% 1-year return. In the lead is Sempra Energy (SRE) with a 36.7% 1-year return. Sempra also ranks highest under the "triple bottom line" approach.
With its flagship index, the Target Rock Sustainable Utility Leaders Index (SULI), the advisory team focuses more on comparing sustainability leaders with non or lesser sustainability leaders. On Tuesday morning (March 26, 2013) Managing Partner Richard Rudden and co-founder Kyle Rudden announced updates to the index.
According to the press release the 2013 winners "have been chosen from a field of approximately 150 publicly traded energy utilities and related companies domiciled in the United States, representing some 350 distinct operating subsidiaries. The awards are grouped into market capitalization categories to acknowledge the different challenges faced by utilities because of their size."
Target Rock says their The Sustainable Utility Leadership Index can be used by investors to guide sustainable and socially responsible portfolio decisions. Interested in making a sustainable investment? Here are the award recipients sorted in categories in alphabetical order:
For the 9 stocks listed below the list average 1-year return is 17%.
Top 3 Large Cap Award Recipients:
Market cap at $49.58B, most recent closing price at $70.28. Dividend yield 4.35%. Payout ratio: 101.15%.
Market cap at $19.13B, most recent closing price at $43.59. Dividend yield 4.18%. Payout ratio: 95.71%.
Market cap at $19.28B, most recent closing price at $79.22. Dividend yield 3.18%. Payout ratio: 67.52%. Sempra's rank as #1 in sustainability was announced March 19 during the ‘State of Energy’ dinner at the EnergyBiz Leadership Forum in Washington, DC.
Average return of the large cap award winners is 17%. Compare performance with the Turbo Chart below:
Top 3 Mid-Cap Award Recipients:
Market cap at $2.38B, most recent closing price at $47.43.Dividend yield 3.2%. Payout ratio: 40.70%.
Market cap at $4.67B, most recent closing price at $19.77. Dividend yield 3.84%. Payout ratio: 46.85%.
Market cap at $6.22B, most recent closing price at $56.64. Dividend yield 3.85%. Payout ratio: 75.36%.
Average return of the mid cap award winners is 20%. Compare performance with the Turbo Chart below:
Top 3 Small Cap Award Recipients:
Market cap at $1.91B, most recent closing price at $48.29. Dividend yield 3.93%. Payout ratio: 73.28%.
Market cap at $1.27B, most recent closing price at $54.80. Dividend yield 2.88%. Payout ratio: 55.78%.
Market cap at $384.19M, most recent closing price at $27.84. Dividend yield 4.96%. Payout ratio: 99.69%.
Average return of the small cap award winners is 14%. Compare performance with the Turbo Chart below:
Finally, compare changes in dividend yield over the past two years for all 9 utilities mentioned above:
Compare analyst ratings for the companies mentioned.
- Rebecca Lipman, Kapitall Editor