As a Muslim investor, you may be wondering whether the stocks listed on S&P 500 are Halal or not. In this article, we will introduce the top 25 stocks of the S&P 500 and find out if they are halal or not.
What is the S&P 500? How Many Companies Are in the S&P 500?
The S&P 500 has been one of the most popular stock market indexes since its creation in 1957. The S&P 500 consists of 500 companies that are leaders within their industries in the US. Currently, there are 503 stocks because some of the companies in the index have multiple classes of equity shares, such as Alphabet (GOOG and GOOGL). Any company that wants to be included in S&P 500 needs to meet the particular criteria, which the index publishers determine. For instance, to join the S&P 500 index, a stock must be issued by a US company with a total market cap of at least $14.6 billion and a public float of 10% of outstanding shares.
The S&P 500 is a market-weighted index, and the larger the company’s market cap, the more valuable an individual company’s stock becomes, as it contributes significantly to the index’s overall return. Therefore, if a company with a smaller market is added or removed from the index, it will not have a substantial impact on the overall return of the index; but, if the index adds or removes any of the largest stocks of the index, it can have a very noticeable impact.
Top 25 Components by Market Cap in the S&P 500
As of Oct. 10, 2022, the top 25 S&P 500 holdings by their weighting in the index:
- Apple (AAPL): 6.99%
- Microsoft (MSFT): 5.63%
- Amazon (AMZN): 3.32%
- Tesla (TSLA): 1.96%
- Alphabet Class A (GOOGL): 1.93%
- Alphabet Class C (GOOG): 1.71%
- Berkshire Hathaway Class B (BRK.B): 1.59%
- UnitedHealth Group (UNH): 1.54%
- Johnson & Johnson (JNJ): 1.39%
- Exxon Mobil (XOM): 1.36%
- JPMorgan Chase (JPM): 1.01%
- Meta (META), formerly Facebook, Class A: 1.01%
- Visa Class A (V): 0.98%
- Procter & Gamble (PG): 0.97%
- NVIDIA (NVDA): 0.96%
- Home Depot (HD): 0.96%
- Chevron Corporation (CVX): 0.93%
- Eli Lilly (LLY): 0.84%
- Mastercard Inc. Class A (MA): 0.82%
- AbbVie Inc. (ABBV): 0.81%
- Pfizer (PFE): 0.77%
- Merck (MRK): 0.76%
- PepsiCo (PEP): 0.73%
- Bank of America (BAC): 0.71%
- Coca-Cola Company (KO): 0.70%
Are these the top 25 stocks of S&P 500 Halal?
According to Musaffa halal stock screener, 15 of the 25 companies mentioned above pass the Shariah compliant criteria. You can see the list that presents which stocks are halal and not halal in the table below:
|Name||Ticker||Market Cap||Shariah Compliance Status||Ranking|
|5||Alphabet Class A||GOOGL||1.366T||Doubtful||–|
|6||Alphabet Class C||GOOG||1.366T||Doubtful||–|
|7||Berkshire Hathaway Class B||BRK.B||638.144B||Not Halal||–|
|8||UnitedHealth Group||UNH||505.313B||Not Halal||–|
|9||Johnson & Johnson||JNJ||448.827B||Halal||4|
|11||JPMorgan Chase||JPM||359.904B||Not Halal||–|
|13||Visa Class A||V||409.638B||Halal||4|
|14||Procter & Gamble||PG||310.099B||Halal||4|
|19||Mastercard Inc. Class A||MA||300.939B||Halal||5|
|20||AbbVie Inc.||ABBV||264.897B||Not Halal||–|
|24||Bank of America||BAC||283.985B||Not Halal||–|
Musaffa employs the AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions) to screen the halal stocks. If you interested to know more Shariah compliant status of the S&P 500 companies, feel free to sign up at Musaffa.com to find the halal stocks you can invest in.