The Motley Fool

2 of the best ethical shares I’d buy in 2020

Image source: Getty Images.

It used to be the case that investing in ethical shares meant sacrificing investment returns. You could have one or the other, but not both. Thankfully, that’s changed. There are now several ethical shares that will not only produce a positive social impact, but will also generate impressive returns. In a world where Covid-19 has highlighted the true fragility of life, I think now is the time to step up our investments in these ethical shares and contribute something positive to society.

Socially responsible investment

Civitas Social Housing (LSE: CSH) is a FTSE 250 listed investment company that invests in social housing. More specifically, the group invests in social homes that are designed for specialist supported living. Its properties typically house adults with learning difficulties and other significant care needs.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

The group’s housing is designed to improve tenant wellbeing. The homes are often a much preferred and cost-effective alternative to hospitals and care homes. Tenants are able to live freely in their own homes, with the benefit of dedicated 24/7 care. Civitas’s investment in effect facilitates improved care for these vulnerable adults, who would otherwise be stuck on waiting lists. The group adds much needed supply to a market where there’s an abundance of demand.

Civitas currently owns a diversified portfolio of over 600 properties, which collectively house over 4,200 residents. It’s been estimated that the company’s investment creates over £114m of social value each year. That’s £3.50 in social value created for every £1 invested.

What’s more, Civitas does all of this profitably. In the year ending 31 March, the group generated after-tax profits of £38m, up from £20m a year earlier. Recent updates suggest that performance has been completely unaffected by Covid-19. Income essentially comes from government provided housing benefit, which is non-discretionary spending-

Civitas does have a slightly high price-to-earnings (P/E) multiple of 18, but compensates with a dividend yield of just under 5%. The fact that earnings are reliable and predictable, along with its positive social impact, makes these ethical shares a buy in my view.

An ethical growth share

Another ethical share I like is Airtel Africa (LSE: AAF). The group specialises in providing telecommunications and mobile money services to customers in 14 African countries. Airtel provides internet data access and financial services to remote parts of Africa. The group is dedicated to promoting financial inclusion and reducing the digital divide. Its mobile money services enable cross-border money transfers at an affordable price, allowing migrant workers to send money back home to their families.

In response to Covid-19, the group has increased its support to African communities, providing free data for educational purposes and financial support to essential workers. Airtel has also recently announced a partnership with UNICEF, which aims to provide children with remote access to learning and to provide cash assistance to their families. The group also works with a group of primary schools to improve the quality of education for more than 18,000 schoolchildren.

Airtel is not a charity though. In the financial year ending 31 March, revenues grew 13% to $3.4bn, while net profits came in at $408m. The group has over 110m customers. With Africa’s growing middle class, favourable demographics and increasing smartphone usage, I think the future looks bright. A P/E of around seven and a huge 7% dividend, also make this ethical share a buy in my opinion.

Speaking of growth shares...

A Top Share with Enormous Growth Potential

Savvy investors like you won’t want to miss out on this timely opportunity…

Here’s your chance to discover exactly what has got our Motley Fool UK analyst all fired up about this ‘pure-play’ online business (yes, despite the pandemic!).

Not only does this company enjoy a dominant market-leading position…

But its capital-light, highly scalable business model has previously helped it deliver consistently high sales, astounding near-70% margins, and rising shareholder returns … in fact, in 2019 it returned a whopping £150m+ to shareholders in dividends and buybacks!

And here’s the really exciting part…

While COVID-19 may have thrown the company a curveball, management have acted swiftly to ensure this business is as well placed as it can be to ride out the current period of uncertainty… in fact, our analyst believes it should come roaring back to life, just as soon as normal economic activity resumes.

That’s why we think now could be the perfect time for you to start building your own stake in this exceptional business – especially given the shares look to be trading on a fairly undemanding valuation for the year to March 2021.

Click here to claim your copy of this special report now — and we’ll tell you the name of this Top Growth Share… free of charge!

Thomas has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.