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Commentary

These Stocks and Sectors Are Stuck in the Swamp

We looked at companies who spent the most money in political contributions.

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American regulations are designed to protect consumers and investors. Of course, businesses have a vested interest in regulatory policy, too, and they’re willing to pay to make sure their voices are heard by policymakers. That’s where lobbying comes into play.

The largest U.S. spenders drop multiple millions of dollars a year to influence public policy. Healthcare spent the most lobbying dollars in 2017-19. Health insurance provider Anthem (ANTM) paid out the most, compared with 151 other companies we evaluated using Sustainalytics’ lobbying and political expenses data point. Companies that scored the worst spent at least $500,000 combined in the trailing three years.

Here are the top 10 spenders from our 151-stock list.

Communication services occupied the most places in our top 10 list, including the ubiquitous companies Alphabet (GOOGL)/(GOOG) and Facebook (FB), and telecommunication providers Comcast (CMCSA) and Verizon Communications (VZ).

The industrials sector is represented on the list by three aerospace companies: Boeing (BA), Northrop Grumman (NOC), and Lockheed Martin (LMT).

To see whether these stocks were representative of their industry spending, we looked at the industries for each of the 151 stocks that received the lowest lobbying and political expenses score.

Healthcare led the way with 29 companies from the 151-stock list. Financial services was closely behind with 26, though none of its stocks made our top 10 spending list. Even with four of 10 top spenders representing communication services, only nine of 151 stocks were represented.

This chart tells only part of the story. We also looked at total expenditures during this time period by sector.

Healthcare remained the top contributor with $311,000,000 spent in political contributions over the trailing three years. Industrials was the second-highest spending sector with $260 million, and communication services followed with $241 million.

How do industries look after removing the top 10 spenders?

For industries not having a top-10 spender, we removed the respective industries’ top spender. For example, we removed Altria (MO) from consumer defensive, Exxon Mobil (XOM) from energy, Microsoft (MSFT) from technology, and Berkshire Hathaway (BRK.A)/(BRK.B) from financial services. We didn’t adjust basic materials or real estate as their numbers are relatively small. Here are the results:

Communication services saw the largest drop, since its top four companies also made the top 10 spenders list. Industrials had the next-largest drop, as it had three of its own in the top 10 list. What remains in the shaded blue looks very similar to the first bar chart--the amount of stocks with at least $500,000 in contributions over the trailing three years. With healthcare and financial services as the top two sectors after adjusting for the largest spenders, here are the top 10 spenders in their respective industries.

Sachin Nagarajan does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.