In today's world, more and more investors are looking to prioritize environmental, social, and governance (ESG) criteria when making investment decisions. This shift in focus is not only driven by a desire to make a positive impact on the world, but also by the increasing recognition that companies with strong ESG practices tend to outperform their peers in the long run. For investors who prioritize ESG criteria and are looking to build a successful dividend growth portfolio, here are some strategies to consider:
1. Screen for ESG leaders: One of the first steps in building a dividend growth portfolio that prioritizes ESG criteria is to screen for companies that are leaders in ESG practices. Look for companies that have strong environmental policies, promote social responsibility, and have transparent governance practices. There are many ESG rating agencies that evaluate companies based on these criteria, such as MSCI, Sustainalytics, and FTSE Russell.
2. Focus on sustainable industries: Another strategy for successful dividend growth investing with an ESG focus is to prioritize companies in sustainable industries. This could include companies in renewable energy, clean technology, healthcare, or other industries that have a positive impact on society and the environment. By investing in companies that are aligned with your values, you can feel good about the impact your investments are making.
3. Consider ESG focused ETFs and mutual funds: If you're looking to build a diversified dividend growth portfolio that prioritizes ESG criteria, consider investing in ESG focused exchange traded funds (ETFs) or mutual funds. These funds are managed with a focus on ESG criteria and can help you achieve diversification while still aligning with your values. Some popular ESG focused funds include the iShares ESG MSCI USA ETF (ESGU) and the Vanguard FTSE Social Index Fund (VFTSX).
4. Engage with companies on ESG issues: As a shareholder, you have the power to influence companies to improve their ESG practices. Consider engaging with companies through shareholder resolutions, voting at annual meetings, or participating in investor coalitions that advocate for better ESG practices. By actively engaging with companies on ESG issues, you can help drive positive change and potentially enhance the long term sustainability of your investments.
5. Monitor ESG performance: Finally, it's important to regularly monitor the ESG performance of the companies in your dividend growth portfolio. Look for companies that are making progress on ESG issues and have a commitment to continuous improvement. By staying informed about the ESG performance of your investments, you can ensure that your portfolio remains aligned with your values and investment goals.
In conclusion, building a successful dividend growth portfolio that prioritizes ESG criteria requires careful research, strategic planning, and ongoing monitoring. By focusing on companies with strong ESG practices, investing in sustainable industries, considering ESG focused funds, engaging with companies on ESG issues, and monitoring ESG performance, investors can build a portfolio that not only generates strong returns but also has a positive impact on the world.