In this line of work, I encounter investors of all kinds. When it comes to taking environmental matters under consideration, I've seen some who will invest in a stock primarily on that basis, but more commonly I find that the environmental achievements of public companies tend to fall on deaf ears.
I believe a happy medium lies somewhere in the mix. Selecting a stock primarily on the basis of ecological karma or visions for a shrinking human carbon footprint can feel peachy... until harsh economic reality sets in. I do hope for a tomorrow where renewable energy drives a more sustainable way forward, but my own painful experience with a (former) pet solar stock serves as a constant reminder that hope does not typically form a solid foundation for an investment thesis. The following one-year chart depicts the recent performance of the PowerShares Wilderhill Clean Energy Portfolio (NYSE: PBW) and a well-known solar stock as a house of pain for many green investors.
SPDR S&P 500 Stock Chart by YCharts
Making sure that green makes you green
While illustrating how quickly green investing can put you in the red, the above chart also shows how a happy medium of combining an environmentally sensitive corporate ethos with powerful economic fundamentals can help ensure that going green makes you some green. I have touted Waste Management (NYSE: WM) as a compelling green investment choice over the years. In addition to the attractive dividend (currently yielding 3.8%) and cozy earnings profile, I get excited by the company's efficient recycling and repurposing of waste, not to mention those cool solar-powered trash compactors that are showing up on the sidewalks of my hometown.
And ever since railroad operator Norfolk Southern (NYSE: NSC) led the industry's charge toward hybrid locomotives back in 2009, I have taken notice of the iconic hauler's proactive and noteworthy efforts to reduce carbon emissions and pursue responsible environmental stewardship. This week, the company announced it will become the first freight railroad in the U.S. to run its fleet on renewable diesel fuel. Through private fuel supplier Mansfield Oil, Norfolk Southern will purchase renewable diesel produced by Dynamic Fuels LLC. Dynamic Fuels is a 50/50 joint venture between Tyson Foods (NYSE: TSN) and Syntroleum (Nasdaq: SYNM). Syntroleum owns "the Bio-Synfining(R) technology for converting animal fat and vegetable oil feedstocks into middle distillate products such as renewable diesel and jet fuel." Syntroleum's stock surged more than 20% after the announcement of the roll-out into Norfolk Southern's fleet.
The greenest locomotive
All of the North American railroads have done a terrific job revolutionizing fuel efficiency and upgrading their respective fleets while defending profitability through a challenging economic cycle. I am in awe of their collective operational achievements. By leading the charge toward hybrid locomotives and now renewable diesel fuel -- and also through the company's effort to plant more than 6 million trees in the Mississippi Delta -- I believe Norfolk Southern has set the industry standard with respect to environmental stewardship while remaining an absolute stud of meaningful profitability. By selecting the greenest locomotive, I believe investors can keep their ethical priorities intact without sacrificing the other sort of green.
- Add Norfolk Southern to My Watchlist.
- Add Waste Management to My Watchlist.
- Add Syntroleum to My Watchlist.
- Add Tyson Foods to My Watchlist.
