One of the best indicators of superior returns on U.S. stocks during President Bush's first term was contributions to Republican candidates.

The 50 companies that most favored Republicans with their political donations delivered an average 44 percent return on investment during the past four years, while the Standard & Poor's 500 Index fell 4.1 percent, assuming dividends were reinvested.The companies, including railroad Union Pacific Corp., insurer Cigna Corp. and communications equipment maker Harris Corp., push an agenda that in many areas parallels Bush's: pared-down regulations, favorable tax codes and a curb on lawsuits.

"This is stunning proof of how the biggest political donors don't just buy access, they buy corporate profits," said Kevin Phillips, 64, a political adviser to former President Nixon and author of the 1969 book "The Emerging Republican Majority." "It just gives other companies further incentives for comparable donations."

Union Pacific, which has returned 29 percent since the end of 2000, benefited when the Republican-controlled Congress eliminated a 4.3 cent a gallon tax on diesel fuel in October. That will help the biggest U.S. railroad save $60 million a year. Cigna, the fourth-biggest U.S. health insurer, has posted a 45 percent gain since Bush signed the Medicare bill last year that created a $410 billion drug benefit administered by insurers.

In the 2004 election, 102 companies donated more than $100,000 through their political action committees - known as PACs - and gave at least 70 percent of their money to Republicans. Including dividends, the group has returned an average 19 percent this year, compared with gains of less than 9 percent in the S&P 500 and Russell 1000 indexes. Political action committees pool donations from company executives and managers, redistributing that money to federal candidates.

Thirty-seven of the top 50 corporate donors to Republicans in the 2000 and 2004 cycles, including Dearborn, Michigan-based Ford Motor Co., Stamford, Connecticut-based International Paper Co. and Irving, Texas-based Exxon Mobil Corp., are manufacturers, agribusinesses, utilities, transportation or natural resource extractors.

Stocks in those industries have in many instances beaten the broader averages. The S&P 500 Railroads Index, which includes Republican donor companies Union Pacific, CSX Corp., Burlington Northern Santa Fe Corp., increased 69 percent in the past four years. The S&P 500 Energy Index, which includes donors Exxon Mobil, San Ramon, California-based ChevronTexaco Corp. and Marathon Oil Corp. of Houston, returned 28 percent.

Forty-seven of the 50 pay dividends and 49 of the 50 are listed on the New York Stock Exchange.

"The stocks outperforming during the Bush era tend to be ones that underperformed during the Clinton era, which in large measure were names in energy, materials, and seemingly old- fashioned, 'old economy,' smokestack manufacturing companies that pay dividends," said James Lucier, a political analyst at Prudential Equity Group in Washington. "Dividend tax cuts, capital gains tax cuts, and depreciation bonuses under Bush clearly helped these guys out a lot."

Companies that bet on Democrats didn't fare as well. Only five publicly traded companies with similar-sized PACs gave more to Democratic candidates in both the 2000 and 2004 presidential elections, according to PoliticalMoneyLine, a Washington-based group that tracks campaign donations.

This year, the 17 companies whose PACs gave out at least $100,000 for the 2004 election and donated more to Democrats than Republicans are up an average 11 percent.

During the Democratic administration of President Clinton, the company PACs that gave the most to candidates - Republican and Democratic - lagged broader indexes. The top 25 corporate donors to Republicans in the 1996 election returned 104 percent from 1996 through 2000, compared with a 132 percent return for the S&P 500. The top Democratic corporate donors returned 86 percent over the same period.

In many cases, companies are simply "voting with their dollars" for policies that would benefit their industries, said Stephen Ansolabehere, a professor of political science at the Massachusetts Institute of Technology, who has published statistical analyses of campaign donations.

"There are public policies, such as those concerning minimum wages, health insurance, or decency over the airwaves, that affect whole sectors," Ansolabehere said. "These laws may be quite different under unified Democratic control and unified Republican control."

That may be the case with Midland, Michigan-based Dow Chemical Co., Covington, Kentucky-based Ashland Inc., Atlanta-based Georgia-Pacific Corp. and Halliburton Co. of Houston. They all stand to benefit from the creation of a fund to end lawsuits over asbestos-related injuries. A gain by Republicans of four seats in the Senate, extending their majority to 55 of the 100 seats, means the legislation may limit corporate liability.

"Of all issues Congress is dealing with - and President Bush and congressional Republicans are pushing for - the asbestos bill probably has the most visible day-to-day impact on stocks," said Alec Phillips, a policy analyst in Washington for Goldman Sachs. Passage of the bill "would be a major event for a number of companies with liability," he said.

Meanwhile, Union Pacific, Jacksonville, Florida-based CSX and Fort Worth, Texas-based Burlington Northern Santa Fe stand to save a combined $138 million a year with the diesel fuel tax cut, based on their 2003 fuel consumption listed in their annual reports.

"Our main issue in the past several years has been the repeal of that tax," said Kathryn Blackwell, a spokeswoman for Union Pacific at the company's Omaha, Nebraska, headquarters, speaking about legislative goals.

Republican lawmakers also have blocked Democratic efforts to raise the minimum wage to $7, a move that might hurt restaurant owners and retailers. Those companies include Tampa, Florida-based Outback Steakhouse, which gave 96 percent of its $401,500 in PAC donations to Republicans this year, and Orlando, Florida-based Darden Restaurants, the owner of Olive Garden and Red Lobster franchises, which gave 90 percent of its $198,084 in candidate donations to Republicans.

"Philosophically it just so happens that Republicans in Congress tend to support that agenda more vigorously," said Rob Green, vice president for federal government relations at the Washington-based National Restaurant Association.

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