Congress' Favorite Dividend Stock

By Paul Tracy
December 16, 2011

It's the most popular high-yielding stock owned by members of Congress.

And they might be on to something. Right now this stock yields 5.9%... and it's one of the most stable dividend-payers in the United States. During the recession, dividends stayed steady, but in the past five years, investors have enjoyed five annual dividend increases.

At last count, 57 members of Congress -- 20 Democrats and 37 Republicans -- owned shares of this company.

I'll tell you more in a moment. But first, I think you should understand why it's important to know why Congress members own the shares at all...

A few weeks ago, 60 Minutes finally blew the lid off the entire thing.

To make a long story short, insider-trading is legal for members of Congress and many of their high-ranking aides. They can trade based on the information they encounter in their day-to-day work, even if it is nonpublic information. (For the full story, you can read some of our thoughts on the topic here.)

We have been telling readers about this for months. In fact, we even put out a special report -- "Congress' Dirty Secret" -- that outlined the problem and showed people how to find out what their Congressman owns with a few clicks of a mouse.

But there's no illusion here. We could scream about the problem until we're blue in the face. However, when 60 Minutes -- one of the most-respected investigative journalism programs on TV -- dedicates a segment to the issue, the nation pays attention.

 

And we're happy to see it getting the press. There's no doubt this is a problem. According to data from the Center for Responsive Politics, 250 of the 535 members of Congress are millionaires. That's 47%! In other words, being a millionaire makes you "average" in Congress.

[InvestingAnswers Feature: The 5 Wealthiest Members of Congress]

Meanwhile, according to a Barron's story, members of Congress outperform your typical investor by an extra 6.8 percentage points each year.

Let me be clear. We're not suggesting Congress has inside information on AT&T (NYSE: T) -- the high-yielding stock that's owned by nearly 60 members of Congress (that makes it the most popular income stock owned by our representatives).

However, when dozens of millionaires with a history of beating average investors year after year own a particular stock, we think it's smart to pay attention.

Obviously, AT&T won't make you a millionaire overnight, but it is one of the most stable businesses in the United States. The shares fell with the broader market during the recession, but the underlying business kept steadily making money.

Today the company takes in about $120 billion in revenues each year and generates $36 billion in cash from operations. Of that, roughly $10 billion annually is returned to investors via dividends. And payments have increased every year going all the way back to the 1980s.

[InvestingAnswers Feature: 6 Projects You Won't Believe the Government is Funding]

The Investing Answer: I'm not necessarily recommending you snap up some shares of AT&T, but there is plenty to like about the stock... and importantly, Congress seems to agree.

[Note: As I said, we have more about Congress' insider trading here. We've even put together a special report -- "Congress' Dirty Secret: The 6 Most Popular Stocks Owned by Your Representatives" -- on the topic. Visit this link to learn more about Congress' "dirty secret."]