Disclaimer: Please be advised that the information provided in this article is relevant as of the time of its composition. However, it is important to recognize that due to the periodic release of new financial reports on a quarterly basis, the status of the mentioned stocks may undergo changes. Therefore, readers are encouraged to exercise diligence and consult updated financial information before making any investment decisions.
For those who adhere to Islamic principles, this means investing in Shariah-compliant stocks, which are not only financially rewarding but also morally and ethically sound.
The importance of ethical investing is more prominent than ever. Whether you’re a seasoned investor or just dipping your toes into the investment pool, finding the right Halal investment opportunities can be daunting.
That’s why we’ve carefully researched and curated a list of the 10 best halal stocks to invest. Our selection is based on multiple factors, which we will discuss below.
From cutting-edge technology companies to steadfast industries that have stood the test of time, we aim to provide diverse options to make your investment journey profitable and ethical.
So, without further ado, let’s delve into the investment opportunities that promise attractive returns and allow you to uphold your values and religious principles.
What Does Halal Stock Mean?
In Islamic finance, the term “Halal” refers to what is permissible or lawful according to Islamic law, as defined in the Quran. Therefore, Halal stocks are shares of companies that operate in accordance with Islamic principles, avoiding businesses that derive income from activities considered “Haram” or forbidden in Islam, such as gambling, alcohol, pork, and the earning of interest (Riba).
Investing in Halal stocks enables Muslim investors and those interested in ethical investing to align their financial decisions with their religious or moral beliefs.
Parameters That Determine the Shariah Compliance of a Stock
When it comes to the stock market, avoiding companies directly involved in Haram activities is insufficient to invest in Shariah compliance. There are specific financial ratios and criteria that a company must meet for its stock to be considered Halal. Below are some key parameters that are generally used to determine the Shariah compliance of a stock:
A) Business Activity
The combined value of Non-Halal and Doubtful sources of revenue should not exceed 5% of the Total Revenue (Gross Sales + Other Income). This criterion ensures that the company’s primary business activities align with Islamic principles. If a company’s Haram or Doubtful income exceeds this percentage, it is generally considered non-compliant. This means investors who are looking for Halal options should avoid them.
Prohibited Business Activities
To provide more context, here is a list of business activities that are generally considered Haram and thus should be avoided when searching for Halal investment opportunities:
- Gambling: Activities related to betting and games of chance.
- Alcohol: Companies that manufacture, distribute, or sell alcoholic beverages.
- Pork-Related Products: Businesses that deal in pork and pork-derived products.
- Tobacco: Firms engaged in producing, distributing, or selling tobacco products.
- Marijuana: Companies involved in the cannabis industry unless it is specifically for medicinal purposes and permitted by Shariah scholars.
- Adult Entertainment: Businesses that generate revenue from the adult entertainment industry.
- Cloning: Companies involved in the cloning of humans or animals.
- Firearms and Defense: Firms that produce or sell weapons, firearms, or engage in defense contracting.
- Institutions That Deal with Interest: Financial institutions that generate income through interest-based loans or securities.
- Excess Debt: Companies with debt levels considered excessive according to Islamic financial principles.
B) Interest-bearing Securities and Assets
According to the AAOIFI standards, to be Shariah-compliant, the total amount of interest-bearing securities and assets, whether short-term or long-term, should not exceed 30% of the company’s market capitalization. In Islamic finance, earning money from money, such as by charging interest, is considered Haram. Therefore, this parameter ensures that the company’s financial structure aligns with Islamic laws concerning interest.
C) Interest-bearing Debt
Similar to the point above, a company’s interest-bearing debt, whether it’s long-term or short-term, should not exceed 30% of its market capitalization to be considered Halal. High debt financed through interest-bearing loans is not permissible under Islamic law, as it is viewed as a form of exploitation.
These parameters act as guidelines for investors who are concerned with maintaining the integrity of their faith-based financial portfolios. By adhering to these rules, you can ensure that your investment is not only potentially lucrative but also ethically sound and in line with Islamic principles.
Best Halal Stock Screening and Investing Platform
Discovering the perfect app for Halal investing isn’t easy—not because there’s an overwhelming number of choices, but because truly comprehensive platforms are rare. Most people are not simply looking for a basic interface to park their money and wait for returns. Instead, they are searching for a holistic platform that offers educational materials, helps assess the Shariah compliance of each stock, provides immediate customer assistance, and ensures top-notch security.
Look no further; Musaffa has you covered. Guided by esteemed Islamic scholars and Shariah advisors, Musaffa offers a range of investment options aligned with Islamic values and meeting the strictest industry benchmarks.
But Musaffa goes a step further. We’ve created the Musaffa Academy, aimed at enlightening users on a wide array of topics—from Islamic finance fundamentals to complex investment analysis techniques, both technical and fundamental.
Our mission is to become the ultimate Islamic finance resource for individual investors and enterprises. Leveraging advanced technology, we strive to make the road to Halal investing smoother for our community. Furthermore, we are in talks with international corporations to expand Halal investment choices for Muslims globally.
Shariah-Compliance Certification
Our in-house Shariah board persistently scrutinizes our operational practices, technology, and systems to ensure full adherence to Islamic principles. Our skilled financial analysts meticulously assess each publicly traded firm by examining all publicly disclosed data—annual reports, quarterly updates, company websites, press statements, and more.
We categorize the stocks we evaluate into three Shariah-compliance statuses: Halal, Not Halal, and Doubtful. Any stocks we haven’t yet reviewed fall under the “Not Covered” classification.
Upon confirming a stock’s Shariah compliance, we further categorize them into one of five groups, ranking them from 1 to 5. The higher the rank, the more compliant the stock is with Shariah laws. For example, a stock ranked 5 is among the most Shariah-compliant in our coverage.
We review annual and quarterly filings, company communications, and press updates to keep you fully informed. We also fine-tune our assessments based on the detailed footnotes in these reports, offering you a transparent view of a company’s financial health.
Our long-term vision involves launching a Halal investment app accessible in over 150 countries, cementing our position as the preferred investment platform for Muslims worldwide. So, if you’re searching for a one-stop shop for Halal investment, your search ends here. Register now to kickstart your journey in Halal investing.
10 Best Halal Stocks to Invest in 2023
As we navigate through the financial landscape of 2023, many investors are keen on aligning their portfolios with ethical and religious principles, specifically Halal-compliant investments. To assist you in this endeavor, we’ve curated a list of the 10 Best Halal Stocks to Invest in 2023, each carefully vetted for Shariah compliance, industry performance, and growth potential.
Let’s have a look at what they are.
4 Best Halal Stocks to Invest in 2023 in India
1. Hindustan Unilever Ltd (HINDUNILVR.NS)
Hindustan Unilever Ltd. engages in the manufacture of consumer goods. The company is headquartered in Mumbai, Maharashtra, and currently employs 21,000 full-time employees.
The firm’s portfolio includes household brands, such as Lux, Lifebuoy, Surf Excel, Rin, Wheel, Glow & Lovely, Pond’s, Vaseline, Lakme, Dove, Clinic Plus, Sunsilk, Pepsodent, Closeup, Axe, Brooke Bond, Bru, Knorr, Kissan, Kwality Wall’s, Horlicks and Pureit.
- Market Cap: 5.94T
- Avg. Volume: 2.47M
- Dividend Yield: 0.73%
2. Maruti Suzuki India Ltd (MARUTI.NS)
Maruti Suzuki India Ltd. engages in the manufacture, purchase and sale of motor vehicles, components, and spare parts. The company is headquartered in New Delhi, Delhi and currently employs 16,875 full-time employees.
The company went IPO on 2014-07-09. The company is focused on the business of manufacturing and sale of passenger and commercial vehicles.
- Market Cap: 4.04T
- Avg. Volume: 561.64K
- Dividend Yield: 0.74%
3. Sun Pharmaceutical Industries Ltd (SUNPHARMA.NS)
Sun Pharmaceutical Industries Ltd. engages in manufacturing, developing, and marketing of pharmaceuticals products. The company is headquartered in Mumbai, Maharashtra and currently employs 41,000 full-time employees.
The firm is engaged in the business of manufacturing, developing and marketing a wide range of branded and generic formulation and active pharmaceutical ingredients (APIs).
- Market Cap: 3.61T
- Avg. Volume: 3.00M
- Dividend Yield: 0.82%
4. UltraTech Cement Ltd (ULTRACEMCO.NS)
UltraTech Cement Ltd. is a holding company, which engages in the manufacture and sale of cement and cement related products. The company is headquartered in Mumbai, Maharashtra and currently employs 22,916 full-time employees.
The company went IPO on 2004-08-24. The company offers Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Slag Cement (PSC), Composite Cement (CC), and Ready-Mix Concrete (RMC).
- Market Cap: 3.19T
- Avg. Volume: 555.24K
- Dividend Yield: 0.32%
3 Best Halal Stocks to Invest in 2023 in the United States
1. Apple Inc (AAPL)
Apple Inc. is an American multinational technology company headquartered in Cupertino, California, that designs, develops, and sells consumer electronics, computer software, and online services.
It is considered one of the Big Four technology companies, alongside Amazon, Google, and Microsoft.
- Market Cap: 3.32B
- Avg. Volume: 73.43M
- Dividend Yield: 0.45%
2. NVIDIA Corp (NVDA)
NVIDIA Corp. engages in the design and manufacture of computer graphics processors, chipsets, and related multimedia software. The company is headquartered in Santa Clara, California and currently employs 26,196 full-time employees.
The firm has two segments. The Compute & Networking segment includes its data center accelerated computing platform; networking; automotive artificial intelligence (AI) co*ckpit, and autonomous driving development agreements.
- Market Cap: 3.18T
- Avg. Volume: 196.10M
- Dividend Yield: 0.02%
3. Eli Lilly and Co (LLY)
Eli Lilly & Co. engages in the discovery, development, manufacture, and sale of pharmaceutical products. The company is headquartered in Indianapolis, Indiana and currently employs 39,000 full-time employees.
The firm discovers, develops, manufactures and markets products in the human pharmaceutical products segment. Its diabetes products include Basaglar, Humalog, Humulin, Jardiance, Mounjaro and Trulicity.
- Market Cap: 832.23B
- Avg. Volume: 2.56M
- Dividend Yield: 0.53%
3 Best Halal Stocks to Invest in 2023 in Malaysia
1. PETRONAS Chemicals Group Bhd
(PCHEM.KL)
PETRONAS Chemicals Group Bhd.operates as an investment holding company. The company is headquartered in Kuala Lumpur, Wilayah Persekutuan and currently employs 6,288 full-time employees. The company went IPO on 2010-11-26.
The Company’s business activities involve the production, marketing and sale of a range of chemical products, including olefins, polymers, fertilizers, methanol, other basic chemicals, derivative products and specialty chemicals.
- Market Cap: 55.68B
- Avg. Volume: 2.92M
- Dividend Yield: 1.27%
2. Digi.Com Bhd (DIGI.KL)
DiGi.com Bhd.is an investment holding company, which engages in the provision of mobile communications services and related products in Malaysia. The company is headquartered in Subang Jaya, Selangor and currently employs 1,400 full-time employees.
The firm is engaged in the provision of mobile communication services and its related products in Malaysia. The firm provides telecommunication and related services to customers across the country.
3. CelcomDigi Bhd
(CDB.KL)
CelcomDigi Bhd.is an investment holding company, which engages in the provision of mobile communications services and related products in Malaysia. The company is headquartered in Subang Jaya, Selangor and currently employs 3,818 full-time employees.
The firm is engaged in the provision of mobile communication services and its related products in Malaysia. The company offers products and solutions across mobile, fixed, Internet of things (IoT), cloud, and cybersecurity.
- Market Cap: 49.04B
- Avg. Volume: 4.13M
- Dividend Yield: 1.90%
How to screen halal stock with Musaffa?
Here’s how you can screen halal stock with Musaffa:
Step 1: Create a Musaffa Account
Begin by signing up for a Musaffa account. You can either use your email or your Google account for quick registration.
Step 2: Search Stocks or ETFs
Once your account is set up, use the search function to look for specific stocks or Exchange-Traded Funds (ETFs) that interest you.
Step 3: Use the Musaffa Stock and ETF Screener
For a more comprehensive view, navigate to the Stock and ETF screener feature on the Musaffa app to explore a wider range of Halal investment opportunities.
Step 4: Select Your Desired Market
Choose the financial market in which you’re interested, whether that’s U.S. stocks, international stocks, or any other market available on the platform.
Step 5: Use the Filter Tool
Utilize the filter tool to narrow down your search. You can optimize the results based on various criteria like industry, market capitalization, and Shariah compliance status.
Step 6: Explore Popular Halal Stocks
Check out the section showcasing popular Halal stocks to get an idea of trending investment opportunities that are also Shariah-compliant.
Why is it important to invest in halal stocks?
Investing in Halal stocks is important for several reasons, both practical and ethical:
Alignment with Ethical and Religious Values
For Muslim investors, Halal stocks offer a way to align their financial activities with their religious beliefs. Islamic finance operates on social justice, transparency, and risk-sharing principles, which many find appealing regardless of their religious affiliation.
Diversification and Financial Growth
Investing in Halal-compliant stocks can provide a robust avenue for portfolio diversification, even for non-Muslim investors. These stocks often come from ethical, sustainable, and resilient sectors, which can be good for long-term financial growth.
Risk Mitigation
Halal stocks tend to avoid heavily leveraged companies or those that derive significant income from interest and other speculative activities. This can reduce financial risk, as companies with excessive debt or risky business models can be more volatile and susceptible to market downturns.
Social Impact
Halal investments often intersect with socially responsible investing, given their focus on ethical considerations. This means your investments can contribute to positive social outcomes such as sustainable development, social equity, and environmental responsibility.
Bottom line
In this article, we’ve delved into what constitutes a Halal stock, the criteria determining its Shariah compliance, and the significance of investing in such stocks.
We also highlighted Musaffa as an all-encompassing platform for screening and investing in Halal-compliant stocks, offering a seamless trading experience, educational resources, and immediate customer support.
Our list of the 10 Best Halal Stocks to Invest in 2023 is a carefully curated guide to making informed choices in aligning your portfolio with your values. We’ve also laid out a step-by-step guide on screening for these stocks using the Musaffa app, making it easier than ever to make ethical, Sharia-compliant investment choices.
Investing in Halal stocks is not just a religious obligation for Muslims but also a conscientious choice that could lead to sustainable financial growth. With options that align with both Islamic principles and industry performance, you can engage in responsible investing while also working towards your financial goals.
If you are interested in learning more about Islamic Finance related topics, please clickhere and visit our academy.
Also, feel free to sign up for our free Halal stock screening service atmusaffa.com
Disclaimer:Important information
