3 Stock Picks for Equal Pay Day 2024

Women in the US on average earn $0.84 for every dollar men earn. That means Equal Pay Day falls on March 12 this year, a date that represents how far into the year a woman must work to earn as much as a man did during the previous calendar year.

In honor of Equal Pay Day, I looked for companies that are championing pay-equity practices and that also rank well on Morningstar investment metrics. Some of the companies I found include Verizon Communications VZN, Truist Financial TFC, and Salesforce CRM.

But first, I looked at the three companies we highlighted last year in a similar exercise. These included Adobe ADBE, American Express AXP, and Citigroup C, which all had standout pay-equity practices alongside strong financial performance.

In 2023, Adobe Jumped While American Express and Citigroup Lagged

Using Morningstar Investor, I built a hypothetical portfolio with the three stocks and selected a purchase date of March 2, 2023, the date the initial article published. Adobe returned 78.89% over the period, American Express 6.84%, and Citigroup 0.08%. By contrast, the S&P 500 returned 21.42%. An equally weighted portfolio of the three stocks would have risen 49.11%. Not bad. I’ve highlighted the current Morningstar metrics below:

American Express AXP

• ESG Risk Rating: 19.2, Low
• 2 Stars
• Price/Fair Value: 1.15
• Morningstar Economic Moat Rating: Wide

Adobe ADBE

• ESG Risk Rating: 14.69, Low
• 3 Stars
• Price/Fair Value: 0.93
• Morningstar Economic Moat Rating: Wide

Citigroup C

• ESG Risk Rating: 26.87, Medium
• 4 Stars
• Price/Fair Value: 0.85
• Morningstar Economic Moat Rating: None

Of course, many factors contribute to a company’s performance. But these cases show that championing pay equity as a core business outcome didn’t necessarily impede financial performance.

Companies With Strong Pay-Equity Performance in 2024

Next, I looked for additional companies demonstrating strong pay equity in tandem with strong financial performance. An increasing number of firms are making progress in implementing pay-equity programs and committing to equitable compensation. The bad news: Only 2% of the Morningstar Sustainalytics’ stock universe has adequate-to-strong pay-equity programs. Therefore, the companies we highlight play a pivotal role in influencing the trajectory of pay equity in the US and on a global scale.

So, which companies are strong pay-equity performers in 2024? Our sustainability team used Morningstar and Morningstar Sustainalytics data to look for large public US firms with strongly rated pay-equity programs and strong financial performance. We analyzed indicators of performance such as the Morningstar Economic Moat Rating, price/fair value ratio, and ESG Risk Rating. We then examined high-performing companies’ public sustainability reports to better understand their pay-equity programs and disclosures.

Here are this year’s picks:

Verizon Communications VZ

• ESG Risk Rating: 18.73, Low
• 4 Stars
• Price/Fair Value Ratio: 0.75
• Morningstar Economic Moat Rating: Narrow

Verizon has maintained a pay-equity program for longer than most US companies, beginning its efforts in 2017. In 2022, Verizon achieved 100% pay equity for women and men across the global firm and across races and ethnicities in the US. In line with its commitment to equal pay, Verizon has committed to removing all interview questions that request previous salary information, to ensure all candidates are considered equally and to ensure fair pay practices during the hiring process. It’s committed to continue factoring pay-equity practices into hiring, promotion, and compensation decisions. In addition to its strong pay program, Verizon maintains a Low ESG Risk Rating and is currently trading at a 25% discount.

Truist Financial Corp TFC

• ESG Risk Rating: 18.03, Low
• 4 Stars
• Price/Fair Value: 0.72
• Morningstar Economic Moat Rating: Narrow

In 2024, this 4-star-rated stock ranked 14th among Just Capital’s 100 most Just companies in the US. Among its corporate sustainability priorities, this commercial bank conducts annual pay-equity assessments for its employees. When Truist conducted its 2022 pay-equity review, it identified and disclosed that about 1% of employees fell within the pay gap and were earning less than peers in similar roles. Truist remediated the problem, adjusting compensation for all employees identified by this study, and plans to continue doing so annually. Additionally, in 2022, Truist increased its minimum wage for hourly workers to $22 per hour, among the highest in the industry. Trading at a 28% discount, this narrow-moat bank currently fares well on key Morningstar metrics.

Salesforce CRM

• ESG Risk Rating: 14.88, Low
• 3 Stars
• Price/Fair Value: 1.05
• Morningstar Economic Moat Rating: Wide

Salesforce began examining its pay gap back in 2015, claiming to be one of the first companies globally to evaluate its pay-equity practices. In 2022, Salesforce found and disclosed that 8.5% of its global workforce was not receiving equal pay for equal work. As a result, it adjusted the salaries of those identified in the study, with 92% of adjustments based on gender and 8% of adjustments based on race or ethnicity in the US. To further its commitment to equity and diversity, Salesforce is a part of the World Economic Forum’s Global Parity Alliance aimed at accelerating DEI practices and closing opportunity gaps within workplaces around the globe. Salesforce’s commitment to sustainability is further showcased through its Low ESG Risk Rating at 14.88.

Interested in learning about Morningstar’s own pay-equity programs? Morningstar will publish its 2023 corporate sustainability report on March 28, 2024, disclosing pay-equity program successes from last year.