In an ever-evolving financial landscape, investors are continually searching for new avenues to grow their wealth in a manner that aligns with their values and beliefs. 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.
As we end 2023, 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 in 2023. 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.
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: 5.87T
- Avg. Volume: 1.28M
- Dividend Yield: 0.68%
2. Asian Paints Ltd (ASIANPAINT.NS)
Asian Paints Ltd. manufactures and markets paints and coating products. The company is headquartered in Mumbai, Maharashtra, and currently employs 7,423 full-time employees.
The Company’s segments include Paints and Home Improvement. Paints segment is engaged in the manufacturing and trading of paints and related services
- Market Cap: 2.69T
- Avg. Volume: 730.65K
- Dividend Yield: 0.14%
3. Titan Company Ltd (TITAN.NS)
Titan Co. Ltd. is a holding company that manufactures and sells watches, jewelry, eyewear, and other accessories and products in India and internationally.
The company is headquartered in Bangalore, Karnataka, and currently employs 7,263 full-time employees. The firm’s segments include Watches and Wearables, Jewellery, Eyewear and Others.
- Market Cap: 2.36T
- Avg. Volume: 843.29K
- Dividend Yield: N/A
4. Avenue Supermarts Ltd (DMART.NS)
Avenue Supermarts Ltd. engages in the operation of retail stores. The company employs 11,312 full-time employees. The company went IPO on 2017-03-21.
DMart is a supermarket chain that offers customers a range of products focusing on foods, non-foods, fast-moving consumer goods (FMCG), and general merchandise and apparel product categories.
- Market Cap: 2.25T
- Avg. Volume: 358.28K
- Dividend Yield: N/A
3 Best Halal Stocks to Invest in 2023 in the United States
1. Tesla Inc (TSLA)
Tesla, Inc. engages in the design, development, manufacture, and sale of fully electric vehicles and energy generation and storage systems. The company is headquartered in Austin, Texas, and currently employs 127,855 full-time employees.
The company went IPO in 2010. The firm’s automotive segment includes the design, development, manufacturing, sales, and leasing of electric vehicles and the sale of automotive regulatory credits.
- Market Cap: 811.62B
- Avg. Volume: 110.37M
- Dividend Yield: N/A
2. Adobe Inc (ADBE)
Adobe, Inc. engages in the provision of digital marketing and media solutions. The company is headquartered in San Jose, California, and employs 29,239 full-time employees. The Company’s segments include Digital Media, Digital Experience, Publishing, and Advertising.
The Digital Media segment provides products, services, and solutions that enable individuals, teams, and enterprises to create, publish, and promote their content anywhere.
- Market Cap: 234.27B
- Avg. Volume: 2.31M
- Dividend Yield: N/A
3. Linde PLC (LIN)
Linde Plc is a global industrial gas and engineering company. The company is headquartered in Woking, Surrey, and currently employs 66,270 full-time employees. The company went IPO on 2018-10-31.
The firm designs, engineers, and builds equipment that produces industrial gases and offers its customers a range of gas production and processing services, such as olefin plants, natural gas plants, air separation plants, hydrogen and synthesis gas plants, and other types of plants.
- Market Cap: 188.74B
- Avg. Volume: 1.09M
- Dividend Yield: 0.66%
3 Best Halal Stocks to Invest in 2023 in Malaysia
1. Westports Holdings Bhd (WPRTS.KL)
Westports Holdings Bhd. is an investment company engaged in port development and management of port operations. The company is headquartered in Klang, Selangor, and currently employs 5,773 full-time employees. The company went IPO in 2013. Bhd. (WMSB).
The firm manages port operations dealing with containerized and conventional cargo. The firm operates through the business of port development and management of the port operations segment.
- Market Cap: 11.90B
- Avg. Volume: 2.12M
- Dividend Yield: N/A
2. Bank Islam Malaysia Bhd (BIMB.KL)
Bank Islam Malaysia Bhd. engages in Islamic banking business and the provision of related services. The company is headquartered in Kuala Lumpur, Malaysia, and currently employs 4,744 full-time employees.
This Bank is principally engaged in the Islamic banking business and the provision of related services. This Bank has approximately 141 branches and more than 900 self-service terminals nationwide. The company operates through three segments: Consumer Banking, Corporate and Commercial Banking, and Treasury.
- Market Cap: 4.83B
- Avg. Volume: 1.53M
- Dividend Yield: N/A
3. Syarikat Takaful Malaysia Keluarga Bhd (TAKAFUL.KL)
Syarikat Takaful Malaysia Keluarga Bhd. The company is headquartered in Kuala Lumpur, Malaysia, and currently employs 967 full-time employees. The firm is principally engaged as an operator of the family and general takaful/ retakaful businesses. Its family of takaful products offers a range of solutions, including term protection, critical illness protection, medical cover, and various others.
Its general takaful products offer comprehensive protection solutions to individuals and businesses in areas of general takaful, including personal accidental cover, coverage for assets through motor takaful, home content, fire cover, machinery breakdown, foreign worker takaful, contractor’s risks, and many more.
- Market Cap: 2.91B
- Avg. Volume: 653.00K
- Dividend Yield: N/A
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.
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.
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.
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 click here and visit our academy.
Also, feel free to sign up for our free Halal stock screening service at musaffa.com
Disclaimer: Important information