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The best shariah compliant halal stocks to buy in 2021
This guide gives you our best five picks for investing in stocks that comply with Islamic principles and laws. Our experts have analysed the markets to choose these companies, and you can read on to find out more about why we’re excited by them.
What are the top Halal stocks to buy?
Here are our picks for the best shariah compliant shares this year. You can find their latest stock price by following the links in the table, or scroll down for more information on each company.
|#||Stock symbol||Company name|
|2||TJX||TJX Companies, Inc.|
|3||ADP||Automated Data Processing, Inc.|
|5||TXN||Texas Instruments Incorporated|
1. Abbott Laboratories (NYSE: ABT)
Abbott Labs is a healthcare and medical devices company based in the US. It dates all the way back into the 19th century, and its main source of revenue over the years has been from nutritional products for children and adults, diagnostic testing equipment, and medical devices like heart pumps.
It soared to prominence in 2020 as one of the leading manufacturers of coronavirus testing kits. It was one of the first to offer a rapid-testing kit, and by the end of the year was producing antibody tests as well. That helped the stock price climb 30% in 2020 and hit highs of $130 in early 2021.
Abbott has made this list because it’s a well-rounded business. It tripled its operating income in three years up to the pandemic, increased revenues by 25%, and net profit margin by 15%. This is a solid company with a diverse income stream, and its medical devices division in particular is primed for rapid growth in a post-pandemic world.
2. TJX Companies, Inc. (NYSE: TJX)
TJX is a multinational company that runs cut-price retail stores in Europe and North America. It owns the TJMaxx/TKMaxx chain, as well as other outlets like Marshalls, Homesense, and Sierra.
It has been a consistent performer for many decades, but the pandemic threw a wrench into the works because the stores rely on foot traffic. Despite an extremely difficult year, the share price actually finished 2020 higher than it started, a testament to the company’s ability to weather a difficult environment.
That is what has earned TJX second spot on this list. It’s used the opportunity of other stores closing down to add new clothing lines, while it’s been able to relocate some stores into better locations. As a consistent performer for so long, it’s now perfectly placed to keep growing as the pandemic lockdowns ease off and people return to the high street.
3. Automatic Data Processing, Inc. (NASDAQ: ADP)
ADP creates software that helps companies run the admin side of their business. Generally, this takes the form of things like payroll processing and human resource management software.
It’s a company that relies on high levels of employment to maintain revenues, so the pandemic year was a tough one. Despite that, however, the stock really began to recover with the arrival of successful vaccines, and stretched its record of raising the dividend to 47 years in a row.
That makes ADP a member of the Dividend Aristocrats Club, and helps earn it a place on this list. It has nearly half a century’s worth of evidence of offering value to its shareholders, and it’s a company that stands to benefit as employment numbers climb in the aftermath of the pandemic.
4. JD.com (NASDAQ: JD)
JD.com is a Chinese ecommerce company that stands as a rival to the internet giant, Alibaba. It started out selling electronics out of a bazaar in Beijing, but now sells almost everything online, from home furniture to groceries.
As with many online retailers, its business boomed during the pandemic. The share price more than doubled as revenues grew by 30%. Over the course of the year, it was also able to raise more than $12bn in a variety of new stock market listings for other companies it owns.
JD has been able to agree strategic partnerships with huge companies like WalMart and Alphabet, and its product range is enormous. It wants to use these partnerships to improve its supply chain, as well as the technology and services it can supply. That’s what has put JD on this list, as it aims to become something like the Chinese version of Amazon.
Texas Instruments Incorporated (NASDAQ: TXN)
Texas Instruments is an American company that manufactures semiconductors for a wide range of industries. Crucially, it’s an IDM – integrated device manufacturer – which means it makes its own chips rather than outsourcing them.
That has helped TI avoid the worst of the global semiconductor shortage. And while TI’s chips aren’t as cutting-edge as the ones produced by Intel and Nvidia, they are cheaper and easier to make. TI has become very good at it what it does: the share price has been growing steadily for a decade and has doubled since the March 2020 crash.
The fact its chips aren’t as advanced is what’s helped TI earn a spot on this list. It isn’t reliant on spending more and more on research and development to keep up. Instead, it tends to return its money back to shareholders. It’s raised the dividend for 17 years in a row and regularly performs share buybacks, making it a great long term, reliable investment.
Where to buy the best Islamic shares
The trading platforms below are the best places to get these shares right away. They are some of the most popular, reliable brokers around and we have been through and approved each one.
What is an Islamic stock?
A company that complies with sharia law. Generally, this means that they don’t operate with forbidden products like pork or alcohol, don’t involve gambling or interest-based financial products, and don’t take on excessive risk.
The important thing to note is that while the primary activity of the company cannot be in any of those fields, there is room for interpretation. All of the stocks on this page comply with the standards laid out by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI).
That means that their revenue that comes from forbidden products does not exceed 5% of the total, interest-bearing debt does not exceed 30% of the market cap, and the total amount of interest-bearing securities does not exceed 30% of the market cap.
Are Shariah shares a good investment?
If you want to create a portfolio that fits in with your religious beliefs, then these stocks are the way to go. But they can also be good investments for people outside the Islamic faith as well: finding companies with ethical business practices that don’t take on much risk is a good recipe for success on the stock market.
Even without companies whose primary activity is forbidden, there are a lot of stocks out there that do fit Islamic investing practices. Look for companies that offer tangible products and a positive contribution to the world, and then there are a variety of different screening apps you can use to make sure the stock is compliant.
Fact-checking & references
Our editors fact-check all content to ensure compliance with our strict editorial policy. The information in this article is supported by the following reliable sources.
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