The Top 25 Cash-Rich S&P 500 Non-Financial Companies

Large U.S. companies hold billions of dollars in cash and cash-equivalents on their balance sheets. The largest of these 83 companies hold over $1.46 Trillion off-shore beyond the reach of the U.S. government according to a report by Bloomberg in March this year. Companies are hoarding such huge piles of cash overseas since they do not want to pay taxes if repatriated back home.They also hold high amounts cash and equivalents in the U.S. as they are unable to invest them in productive ways. While it would be better for all stakeholders if they put this cash hoard to work by building factories and expanding locally and globally, nowadays management and the boards that are supposed to monitor them in many firms are incompetent, selfish and lazy. They would rather waste shareholder wealth on share buybacks, acquisitions or simply help themselves by dipping into the cookie jar with outrageous pay packages, bonuses, stock options and other legally-allowed compensation schemes.

The table below lists the Top 25 S&P 500 Non-Financial Companies by Cash & Short-Term Investments held on their balance sheets:

S.No.CompanyTickerDividend Yield as of May 31, 2013Cash ($Mil.) as of May 15, 2013Sector
1General ElectricGE3.23%79,390Industrials
2MicrosoftMSFT2.68%74,483Technology
3GoogleGOOGN/A50,098Technology
4CiscoCSCO2.89%46,376Technology
5AmgenAMGN1.78%42,075Health Care
6AppleAAPL2.74%39,137Technology
7OracleORCL0.70%33,407Technology
8PfizerPFE3.31%32,708Health Care
9FordF2.70%32,010Discretionary
10Johnson & JohnsonJNJ3.04%21,089Health Care
11WellPointWLP1.95%20,857Health Care
12ChevronCVX3.19%19,048Energy
13Coca-ColaKO2.65%18,428Staples
14IntelINTC3.75%17,073Technology
15MerckMRK3.65%16,141Health Care
16UnitedHealthUNH1.37%16,088Health Care
17Abbot LabsABT1.48%15.174Health Care
18QUALCOMMQCOM2.18%13,493Technology
19Hewlett-PackardHPQ2.36%13,012Technology
20DellDELL2.40%12,777Technology
21IBMIBM1.85%11,993Technology
22BoeingBA1.83%11,853Industrials
23Freeport-McMoRanFCX4.11%9,595Materials
24HumanaHUM1.37%9,539Health Care
25eBayEBAYN/A9,402Technology

 

Source:  Where to find higher yields, 4/22/13, Fidelity Investments

Nearly half of the companies noted above tech companies.This is because they generate a larger portion of their revenue overseas and have traditionally paid out low or no dividends to shareholders. As a result they accumulate cash year after year.

The dividend yield on the S&P 500 as of May 7 was 2.15% and the dividend payout ratio was 32%. Of all the sectors in the index, the technology sector was one of the sectors with low dividend yields and payout ratios. While utilities and telecoms had dividend yields of over 4% and 3% respectively, the technology sector had a dividend yield of just 1.81%  and a payout ratio of 22%. The sector accounted for only 15% of the total dividends paid in the index. Since large-cap technology firms hold so much cash and short-term investments on their balance sheet, Fidelity noted that the possibility of potential dividend increases by these firms is high.

Related ETFs:

  • SPDR S&P 500 ETF (SPY)
  • SPDR Technology Select Sector ETF (XLK)
  • SPDR S&P Dividend ETF (SDY)
  • Vanguard Dividend Appreciation ETF (VIG)

Disclosure: No Positions

Leave a Reply

Your email address will not be published. Required fields are marked *