Congress Likes These Blue Chips. Should You?
Has recent election news whetted your appetite for information about politicians and their money? Then turn your attention to the Center for Responsive Politics, which gathers and posts financial disclosure information on its opensecrets.org website.
The information culled from the reports which senators and House members must submit annually to their ethics committees includes a look at what stocks are popular holdings among our elected representatives. "Just like many Americans, our elected officials like to play it safe with their investments, betting largely on blue chip companies across diverse industry groups," writes the center, though it should be noted that investing styles vary considerably between representatives. The most recently disclosed information is for the 2010 calendar year; disclosures are due each May.
Here's one interesting slicing of the data that can be found on the opensecrets website.
Most popular congressional investments for 2010, based on the total number of investors:
|1. General Electric (NYS: GE)||46||48|
|2. Procter & Gamble (NYS: PG)||33||41|
|3. Cisco Systems (NAS: CSCO)||33||39|
|4. Microsoft (NAS: MSFT)||28||42|
|5. Bank of America (NYS: BAC)||23||38|
Source: Center for Responsive Politics.
This doesn't tell us how much money is invested in each stock, but the opensecrets.org website allows users to check the stocks owned by each senator and House member and the value range included in their disclosure reports. Links to the disclosure filings provide information on who sold or bought what and when.
We've written extensively about the shortcomings of the disclosure process, including a lack of timeliness, a lack of specificity, and the difficulty members of the public have in reviewing the documents.
Although the disclosures greatly lag the buying and selling that senators and representatives are doing, there have been consistencies over the years. In the seven years from 2004 to 2010, General Electric has topped the list of most popular congressional investments based on number of investors. Joining it in the top five during each of those years were Cisco and Microsoft.
In 2010, GE was most popular with 94 congressional investors, and Pfizer and Bank of America tied for No. 5 with 61 investors each. Bank of America has been among the top five most popular every year since 2007 -- the year before the government started pumping billions of dollars into the bank to help it through tough times.
|Bank of America, Total No. of Investors||52||35||71||64||63||73||61|
Source: Center for Responsive Politics.
Whatever the future holds for Bank of America's performance, it's hard to consider the massive turnaround attempt a "blue chip" any longer after the savaging its financials took during the financial crisis and the following years.
Of the top 25 assets by dollar amount in 2010, only Procter & Gamble and Walgreen were held by five or more congressional representatives.
Seventy-four members held a piece of P&G, while 15 owned Walgreen. Altogether, they owned somewhere between $9 million and $40 million of P&G and between $5.4 million and $26 million of Walgreen stock. (Hey, I told you the disclosures lack specificity in some areas.)
For a closer look at what the timing of congressional buys and sells tell us, click here.
Our elected officials tend to be rich, but are they good at picking stocks? It depends on which study and which time period you look at. Some show members of Congress outperforming the market by as much as 12 percentage points annually, while another actually shows slight underperformance.
So how do the widely held blue chips GE, Cisco, Procter & Gamble, and Microsoft look lately? Each has recently reported strong results.
- GE is a $200 billion company yielding 3.6%. In January it reported its seventh consecutive quarter of earnings growth, with fourth-quarter operating EPS up 11% to $0.39. The company says it is positioned to deliver on double-digit operating EPS growth in 2012.
- Cisco reported second-quarter results early in February. It reported a year-over-year GAAP EPS increase of 48% and a non-GAAP increase of 27%. The company also increased its quarterly cash dividend to $0.08, which is a $0.02 increase.
- P&G weighs in with a yield of 3.1%. In January, P&G announced 4% sales growth to $22.1 billion for its December-ended quarter. All six business segments were up over the prior year.
- Microsoft reported record revenue of $20.9 billion in its second quarter, crediting strong business demand and holiday sales for the 5% year-over-year increase. With a market cap of $266 billion, the company yields 2.5%.
All four of these stocks deserve a spot on your watchlist.
We may not have the financial resources of our senators and representatives, which makes it all the more important for us to invest wisely. Dividend-paying stocks are one way to get more bang for your buck. Check out this free report from The Motley Fool to find out how to "Secure Your Future With 11 Rock-Solid Dividend Stocks."
At the time this article was published Motley Fool online editor Kris Eddy does not own shares of companies mentioned in this article. The Motley Fool owns shares of Bank of America, Cisco Systems, and Microsoft.Motley Fool newsletter serviceshave recommended buying shares of Microsoft and Procter & Gamble.Motley Fool newsletter serviceshave recommended creating a bull call spread position in Microsoft. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.