The 3 best ethical UK shares I’d buy in January

The Covid-19 pandemic has accelerated a number of important trends. G A Chester reveals his three best ethical UK shares that should be big beneficiaries.

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Making the world a cleaner, healthier and safer place has become a mainstream preoccupation in recent years. Businesses helping to achieve these goals are likely to prosper. Because of this, investing in ethical UK shares is no longer the niche activity it once was.

Peter Michaelis, manager of the Liontrust UK Ethical Fund, has summed up the attraction well: “To me, it’s a commonsense way of investing, you invest in the way the world is going to be, not the way the world has been in the past.”

With this in mind, here are three ethical UK shares I’d be happy to buy today for the long term.

Wind of change

The British Isles has about the best wind resource in the world, so it’s no surprise to find ethical UK shares available in this form of renewable energy. Greencoat UK Wind (LSE: UKW) is a significant player. It’s a FTSE 250 firm, and has a market value of £2.5bn at a current share price of 134.6p.

The company gives investors the opportunity to participate directly in the ownership of UK wind farms. It aims to provide shareholders with an annual dividend that increases in line with Retail Price Index inflation. It’s on track to pay a dividend of 7.1p a share for 2020. At the current share price, this gives a yield of 5.3%

I think the yield and dividend-growth policy make Greencoat a highly attractive stock. Not only for income-seeking investors, but also for those looking to benefit from the powerful wealth-compounding effect of reinvesting dividends.

Ethical UK shares #2

Halma (LSE: HLMA) is a FTSE 100 firm, valued at £9.6bn at its current share price of 2,530p. Its technologies are focused on growing a safer, cleaner and healthier future. And many of its businesses are market leaders within the four sectors it operates in:

  • Process Safety. Technologies that protect people and assets at work.
  • Infrastructure Safety. Technologies that save lives, protect infrastructure and enable safe movement in public spaces.
  • Environmental & Analysis. Technologies to improve environmental protection and the security of life-critical resources.
  • Medical. Technologies which enhance the quality of life for patients and improve the quality of care delivered by healthcare providers.

I’m confident Halma is a strong ethical UK share with high growth prospects for decades to come. This is why I’d be willing to pay a premium 45 times earnings for the stock with a view to owning it for the long term.

Ethical UK shares #3

Intertek (LSE: ITRK) is another FTSE 100-listed UK share with similar ethical credentials to Halma. And it has similar long-term growth prospects, in my view. It comes with a market value of £9.5bn, and a rating of 32 times earnings at its current share price of 5,870p.

The company’s network of more than 1,000 laboratories and offices in more than 100 countries delivers assurance, testing, inspection and certification solutions. Post-Covid-19, it sees new opportunities, due to the world moving further towards:

  • Safer, more diversified supply chains with greater traceability, improved intelligence and increased resilience.
  • A lower carbon economy, stay-local lifestyles, more remote working, distance learning and online shopping.
  • Better personal safety, higher health, hygiene and wellbeing standards and greater investment in healthcare.

I’d happily back all three of these ethical UK shares to help improve not only the world at large, but also my personal wealth!

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind, Halma, and Intertek. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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