Top-Rated Stocks That Treat Shareholders Right

We've heard of plenty of high-powered companies that barely spare their shareholders' interests a second thought. But don't be disheartened -- plenty of other top-flight companies treat their shareholders with respect.

Institutional Shareholder Services -- the big name in corporate proxies -- measures how well a company performs in as many as 63 categories, covering four broad areas. Moreover, each company is scored relative to its market index and its industry group. It assigns the stocks a rating that it calls it Corporate Governance Quotient, or CGQ.

Some evidence supports the notion that companies with weaker governance have higher risk, decreased profitability, and lower valuations. We'll be looking at stocks that Motley Fool CAPS investors have marked to outperform the market, and which also sport above-average CGQ scores, either in their index group or among industry peers.

Company	CAPS Rating (Max 5)	Index CGQ Ranking*	Industry CGQ Ranking*
Arch Coal (NYSE: ACI)	****	64.1%	88.3%
Charles Schwab (Nasdaq: SCHW)	****	83.4%	96.9%
Chevron (NYSE: CVX)	****	66.3%	95.9%
Healthways (Nasdaq: HWAY)	****	67.9%	83.2%
McDonald's (NYSE: MCD)	****	52.2%	95.6%

Source: Yahoo! Finance, Motley Fool CAPS.
*Relative placement when compared to companies in index or industry. Higher is better.

Although finding good companies and holding them for the long term is one of the greatest secrets to investing, there are many other factors that an investor should consider. How well a company treats shareholders shouldn't be least among them. View these rankings as a way to gauge how these businesses stack up against one another relative to their shareholder policies.

Go to the head of the class
Coal companies are finding themselves covered in soot these days, as steelmakers such as ArcelorMittal (NYSE: MT) announce production cuts approaching 35%. These cuts will likely slow demand for coal, forcing miners like Arch Coal and Peabody Energy (NYSE: BTU) to follow suit. While the short term looks bleak indeed, CAPS member MintCoin has a more appropriate longer horizon, predicting a continued rise in global demand: "Coal is oversold, demand isn't going anywhere but up long term. Adding the most beaten down in the sector that do not have huge debt."

Managed-care provider Healthways has been having a similarly tough go of it this year. Its ability to retain large customers like Cigna, which represents about 20% of its revenue, will be crucial going forward. CAPS member tj99 believes Healthways provides a valuable service while bringing some sanity to the health-care industry:

Good business in a bad market, has declined SIGNIFICANTLY. Some sanity must come to health care, and [Healthways] is one of the few companies approaching the marketplace from a different direction. Price is low, good value.

In August, CAPS member amassafortune praised McDonald's for its move into premium coffee. This investor likes Mickey-D's as a core long-term holding:

McDonald's began their move toward higher growth a few years ago when they upgraded their coffee to compete with the Starbucks/Caribou trend. That move was successful... The move also created more breakfast demand as announced by [McDonald's] in August 08. This strategy adds volume to existing stores with only a small increase in capital needs during a period of tightened credit. Part brilliant strategy and part luck for the timing, Micky-D may have found a way into the Starbucks niche that Starbucks may not easily counter. Even once we can tap our home equity again for two-buck muck once or twice per day, we may have developed a permanent fondness for tiled walls and bright lighting.

A Foolish quotient
Many factors go into whether a stock is a buy or sell. Do corporate governance policies enter into your equation? Whatever your priorities, it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.