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Dividends: The Green Investor's Atlantis

Big media attention distracts from the fact that Green is still a niche investors' market. As more and more utility companies sign on to green initiatives, steady yielding dividends should get easier to come by. Until then, there are ways to piece together some nice income, albeit more unstable than traditional income vehicles.

I've put together, at the request of a Seeking Alpha commenter (thanks EnfantTerribles) a Sort Of Incredible Green Income Machine. Here's the list, with some suggested allocations as well:

Asset 100.00% Yield
Portfolio Yield
PAXHX 17.50% 7.43%
CRATX 15.00% 4.64%
DSBFX 15.00% 4.47%
CSIBX 10.00% 3.87%
DUPFX 5.00% 3.13%
LRY 15.50% 7.28%
IDA 10.00% 4.07%
WFMI 5.00% 3.46%
WTR 3.00% 3.29%
ORA 2.00% 0.43%
LNN 2.00% 0.34%

Total Yield:

Agriculture 7.00%
Bond 62.50%
Diversity 0.00%
Eco Reserve 0.00%
Energy 12.00%
Low Carbon 0.00%
Real Estate 15.50%
Recycle 0.00%
Social 0.00%
Technology 0.00%
Total Green 0.00%
Water 3.00%

As you can see, the majority of the holding are bonds, which isn't ideal for diversification's sake. All the yields listed are based on Friday (7/18) closing prices and the last dividend paid. They are most definitely not guaranteed, but the Smug systems do their best to weed out inconsistent payers. There are some non bond holdings worth looking at, and some stock holdings as well yielding above 3%. The overall stock allocation, however, falls less than 50% at around 38% instead. That should give some cushion for growth amongst the bonds and hopefully continue to flirt with that 5% yield mark.

Because of the high concentration in yielding bond mutual funds, there isn't much in the way of inter-green diversity either. Real estate is an obvious place for steady yields, and our one traded "almost green-ish" real estate stock pick, Liberty Property Trust (LRY), makes for a nice yield especially now that real estate prices have tumbled despite ever consistent cash flows. If those cash flows dry up, though, better watch out. Also in the stockpile is IdaCorp (IDA), an Idaho based energy company generating most of it's energy from hydroelectric sources. Utility companies are usually recession-proof tools, so I wouldn't be surprised to see the price tumble a bit if serious recession concerns start to fade in the backdrop. That said, over the last 7 years the price has remained fairly consistently around the $30/share mark, possibly a good sign for forward stability as well.

I also included Whole Foods Market, Inc (WFMI), as they are a nice solid yielder, but as a "specialty" grocery store with food prices on the rise, it's a bit of a risky play. If you're looking for a really steady yield without as much volatility involved, stick with the mutual fund options. Domini, Pax World, and Communtiy Capital Management are old hands with solid business models. PAXHX clocks in as the cheapest overall bang for you buck - currently a 7% yield, a 1% expense ratio, and a measly $250 minimum!

All in all, it's wise to tread lightly looking for green dividends. I wouldn't be surprised if they start cropping up here and there in the not too distant future, especially with the first pure green REIT on the horizon (in SEC filing stage), but for now, be careful and don't expect great stability except from some of the tried and true stalwart bond funds.

This post first appeared on Smugly Green, please read the originial post: here

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Dividends: The Green Investor's Atlantis


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