4 Dirty Stocks to Avoid

The following video is part of our "Motley Fool Conversations" series, in which advisor James Early and senior technology analyst Eric Bleeker discuss topics across the investing world.

In today's edition, James discusses an area of investing that socially responsible investors should avoid: mountain top removal. While the U.S. energy grid is very reliant on coal, this particular form of mining has a series of negative environmental ramifications. If socially responsible investing is important to you, James recommends avoiding Massey Energy (now owned by Alpha Natural Resources), Arch Coal, and James River Coal, and getting energy exposure instead with a natural gas company like Spectra Energy.

Editor's note: The following video incorrectly claims that Peabody Energy engages in mountaintop mining. The Fool regrets the error.

One of the best reasons to invest in energy is the solid dividends paid out by the companies. For example, James' recommendation in this video -- Spectra Energy -- pays out a 3.6% yield. If you're looking for more great dividend ideas, The Motley Fool has compiled a special free report outlining our 11 top, dependable, dividend-paying stocks. It's called "Secure Your Future With 11 Rock-Solid Dividend Stocks." You can access your complimentary copy today at no cost! Just click here to discover the winners we've picked.

Eric Bleeker and James Early have no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Spectra Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 14, 2012, at 10:04 AM, kwstiegert wrote:

    Long run, no doubt your comments will hold true. However, with warm winters, extensive new supplies of natural gas, excessive inventories of coal and natural gas, and advancing wind, nuclear and solar capacities, it is not at all clear when prices for any non-oil energy source will start to improve. With power plants able to switch feed stocks, elasticities of substitution will greatly increase over time and coal and natural gas prices will begin to work more in tandem. Currently, both coal and natural gas production in the high cost regions around the U.S. are shutting down. Your best investments may lie in those companies in either coal or natural gas that enjoy the very lowest costs.

  • Report this Comment On February 14, 2012, at 10:09 AM, sillywilly12 wrote:

    You might want to do your research a little more thoroughly. James River Coal Company does not do Mountain Top Removal.

  • Report this Comment On February 14, 2012, at 12:43 PM, BCSutton wrote:

    Peabody Energy does not engage in the practice of mountaintop mining. The statement above warrants a retraction. We return mined lands to a condition that is equal to or better than before mining occurred.

    Our work is recognized globally for best practices and includes 2011 honors in the United States, Australia and Mongolia for environmental excellence and social responsibility.

    Beth Sutton

    Peabody Energy

  • Report this Comment On February 14, 2012, at 2:01 PM, jsIRA wrote:

    Buying on weakness. Good price to get into coal stocks.

  • Report this Comment On February 14, 2012, at 2:23 PM, TMFJamesEarly wrote:

    Beth -- thanks. We have clarified that Peabody does not engage in MTR anymore, and I regret this mistake. Good for Peabody, too, in this regard.

    Sillywilly, I've found multiple pieces of info linking James River Coal to MTR, as recently as 2011.

    https://docs.google.com/viewer?a=v&q=cache:-jrFdk90W6kJ:...

    http://www.hazard-herald.com/pages/full_story/push?article-L...

    http://www.advfn.com/nasdaq/StockNews.asp?stocknews=JRCC&amp...

  • Report this Comment On February 15, 2012, at 6:54 AM, HoldThatWinner wrote:

    TMF JamesEarly, according to your article and your CAPS score, it is apparent that you are just jumping on momentum along with the rest of the crowd. I can say this with utmost assurance that over time you will be proven wrong with your calls in this botched piece.

    Best,

    HTW

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