Stocks
Is stock trading halal? Screening, dividends, and purification
Trading stocks is permissible in Islam — but not every stock qualifies. Owning shares in a company means owning a piece of its business, so the company itself has to be Shariah-compliant. Two filters apply: the business activity, and the financial structure.
Read our methodology and editorial policy.
Short answer
Yes, trading shares of Shariah-screened companies is halal. The company's primary business must be permissible, and its financial ratios (debt, interest income, cash) must fall within accepted thresholds. Income from any small impermissible component should be purified through charity.
Business-activity screen
A company is screened out if its primary revenue comes from impermissible activities. Standard exclusions: conventional banking and insurance, alcohol, pork, tobacco, weapons, adult entertainment, gambling, and conventional media with substantial impermissible content.
Financial-ratio screens
Even a permissible business fails if its balance sheet leans too heavily on interest. The most common standard (AAOIFI / S&P Shariah / Dow Jones Islamic):
- Interest-bearing debt / market cap < 30%
- Cash + interest-bearing securities / market cap < 30%
- Interest income / total revenue < 5% (purification required)
Dividend purification
If a screened-permissible company still earns a small percentage of revenue from impermissible sources (typically incidental interest income), the same percentage of your dividends should be given as charity (sadaqah) without expecting reward, to purify the income.
The practical next step
Open an Islamic (swap-free) account with our partner broker — no overnight interest, no riba, ready in minutes.
Frequently asked questions
How do I check if a stock is halal?
Use a Shariah screening service like Zoya, Islamicly, or Wahed's screener. They apply the AAOIFI / S&P methodology to individual tickers.
Are ETFs halal?
Conventional broad-market ETFs typically include haram stocks. Shariah-compliant ETFs (e.g. SPUS, HLAL, ISWD) screen their holdings — those are halal alternatives.
Is buying on margin halal?
Conventional margin loans charge interest and are not permissible. Cash accounts are the halal default.