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NextEra Energy Stock Forecast: Sunny and Windy

If you’re someone who drives a rig that gets 10 miles per gallon, here’s how you can hedge the increasing costs at the pump. Invest in two dividend champions whose ebb and flow are tied directly to the price of oil – Exxon Mobil (XOM) and Chevron (CVX). Exxon has a fascinating business model with upstream and downstream segments that are negatively correlated. When oil is expensive, downstream makes loads of money selling a commodity. When oil is cheap, upstream’s key input, crude oil, becomes a whole lot cheaper. We know some people get irked about investing in oil companies, so let’s address that.

MSCI’s CEO was recently talking to Investment Week about comments raised as to why some ESG indices still contain exposure to oil companies. (Why ESG investors are only finding out about this now just goes to show how little thought is going into their investment decision making processes.) Here’s what Mr. Fernandez said about why ESG products still need to invest in companies with weak ESG scores such as big oil.

“ESG ETFs are indices that are trying to balance two concepts,” he said. “They are trying to balance ESG commitments with not being too far from market cap indices.” Fernandez said that if an index-tracking fund strays too far away from its benchmark then “there is going to be too much of a price to pay” in terms of performance.

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