What Does That Have to Do with Your Dividend?

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You know Your Survival Guy loves dividends and values his fiduciary duty to clients. But Richard Vanderford writes in The Wall Street Journal that this year companies will be voting on issues like “abortion, guns and climate change.” What does any of that have to do with your dividend? Vanderford continues:

A backlash against companies taking on issues ranging from climate change to abortion rights is helping to push shareholder proposals to record numbers this year.

More advocacy groups are using these resolutions to try to inject their voices into the corporate agenda, questioning companies’ adoption of policies that some view as being overly political. One group, for example, put forward a resolution requesting that Eli Lilly report on the risks of supporting abortion. Last year, the drugmaker expressed its opposition to Indiana’s near-comprehensive abortion ban.

Such proposals questioning companies’ stances on social and environmental issues have come in record numbers, surging to 74 for annual meetings held before May 31, up from 43 last year, according to data from ISS Corporate Solutions, a unit of proxy-advisory firm ISS.

“The incredible dissension in the political arena is spilling over into the capital markets,” said Heidi Welsh, executive director of the Sustainable Investments Institute, a U.S.-based nonprofit that says it provides nonpartisan analysis of sustainability issues. “Companies are getting dragged into partisan fights that they don’t want to be in, but they can’t avoid it anymore.”

Companies are facing proposals from both sides of the political spectrum, dragging them into the increasingly fractious conversations over environmental, social and governance issues. In total, 682 shareholder proposals were filed for annual meetings being held through May 31, according to ISS Corporate Solutions.

“This is becoming a focal point of our society as a whole,” said Jun Frank, an ISS Corporate Solutions managing director and lead author of a paper on the topic scheduled to be published this week.

As Republican politicians including Florida Gov. Ron DeSantis continue to push back on ESG, conservative-leaning shareholders have put forward proposals questioning, for example, the prudence of corporate diversity policies and the feasibility of decarbonization. Businesses should focus on the bottom line, they say.

“Companies are abandoning their fiduciary duties to shareholders to adopt the hard left position,” said Scott Shepard, a fellow at the National Center for Public Policy Research, a Washington-based conservative think tank that has put forward a number of anti-ESG proposals. “We’re just trying to get them back to sanity and neutrality.”

Action Line: “Abandoning their fiduciary duty?” Your Survival Guy doesn’t like the sound of that. Either you’re a fiduciary, or you’re not. Companies and asset managers owe it to shareholders and clients to put their interests first. When you’re ready to talk to someone who puts your interests first, I’m here.

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E.J. Smith - Your Survival Guy

E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West (RIP JB) and Paris. Please get in touch with E.J. at ejsmith@yoursurvivalguy.com To sign up for my free monthly Survive & Thrive letter, click here.

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