These companies hoarded the most cash in 2013

Despite larger dividends and more stock buybacks, the top 19 saw cash gains of nearly 22% in the last year.

By Benzinga Dec 18, 2013 5:11PM

Image: Money (© Corbis/Corbis)By Charley Blaine


At the end of its 2013 fiscal year, Apple (AAPL) listed $40.59 billion in cash, cash equivalents and marketable securities on its balance sheet. That's roughly equivalent to General Motors' (GM) expected revenue for the fourth quarter.


Apple's cash position gets even bigger if one adds its inventory of long-term marketable securities. That brings the total to nearly $147 billion. And here's what makes the total so amazing: It represents 86 percent of the company's revenue and nearly 71 percent of Apple's total assets.


Apple is hardly alone among non-financial companies in its gigantic holdings of cash and securities. Microsoft (MSFT) listed $79.3 billion just in cash and cash equivalents at the end of its September quarter, the first of its 2014 fiscal year. That was 56 percent of assets. (Microsoft owns and publishes Top Stocks, an MSN Money site.) Google (GOOG) had $54.7 billion in cash and equivalents at the end of September -- 52 percent of assets.


And, for non-financial Corporate America, the cash is piling up.


The third quarter saw corporate cash hit a new high -- $1.25 trillion. That was a fifth-straight quarterly record, according to Howard Silverblatt, senior index analyst at S&P Dow Jones.


The top 19 companies were holding on to $595.5 billion, up 21.5 percent from the end of 2012. And that doesn't include Apple's inventory of marketable securities.


All this cash is building up despite larger dividends, stock buybacks, special dividends and the like.


A record $300 billion in dividends will be paid out this year. But the average corporate payout ratio this year has been 36 percent; the historical average is 53 percent.


Apple paid out $10.5 billion in dividends alone in its 2013 fiscal year and sold $17 billion in bonds earlier this year. Its cash hoard grew by $25 billion from the end of its 2012 fiscal year. Small wonder that Apple has become a target of Carl Icahn, the investor who's become a billionaire with aggressive bids to restructure companies.


The buildup is due to several factors.


An important issue is fear, Silverblatt says. Politicians grumble that corporate bosses are just sitting on cash and letting their stock prices rise but aren't investing in new plants in equipment at home.


But many executives don't believe that new investments will pay off quickly enough. "They're not sure they can sell all the widgets," he said in an interview. And managers are not hired simply to spend without thinking. "Just because you have it doesn't mean you have to spend it."


There are exceptions: Automakers are adding shifts and reopening plants. But, the demand appears to be real.


A second factor is a sort of tax dispute. U.S. companies keep gobs of cash -- profits from non-U.S. operations -- in offshore accounts. They won't bring the money back to, say, New York, Seattle or Cupertino, Calif., because it would be subject to the 35 percent U.S. corporate income tax rate. Better to keep it in Ireland or Luxembourg, where corporate tax rates are far lower.


A third reason is that many companies like Apple, Microsoft, Google and Cisco Systems (CSCO) are so profitable that the cash just builds up. Others, like Pfizer (PFE) and Johnson & Johnson (JNJ) need large supplies of funds to finance research or make acquisitions to replace aging drugs.


Some companies had cash on their books on Sept. 30 and then promptly spent it or will spend it soon. Case in point: In early September, Verizon Communications (VZ) raised $49 billion to buy out Vodafone (VOD) stake in Verizon Wireless. So it listed cash of $54 billion at the end of September. Moreover, with record-low interest rates, companies have been selling record amounts of debt.


How long the cash buildup will last will depend in large part on the domestic and global economies.


Many economists believe 2014 could see some real growth that would give companies the all-clear signal to start investing with the confidence of a payoff. In the meantime, Silverblatt says, investors shouldn't demand that companies make investments they don't believe in.


The biggest holders of cash among non-financial S&P 500 companies










Cash at Sept. 30

Cash as % of market cap

Cash as % of assets

Microsoft

$79,934

25.96%

56.15%

Verizon Communications

$57,357

42.14%

20.73%

Google

$54,739

15.31%

52.10%

Cisco Systems

$48,201

43.09%

44.74%

Apple *

$40,590

8.13%

19.61%

Oracle

$39,137

25.53%

45.29%

Pfizer

$33,714

17.26%

19.21%

General Motors

$26,814

46.49%

15.91%

Ford Motor

$26,145

40.42%

13.00%

Johnson & Johnson

$25,228

9.86%

19.88%

* Apple also had $106.2 million in long-term marketable securities at the end of its fiscal year.  Total cash, cash equivalents and marketable securities totalled $146.67 billion.

Source: S&P Dow Jones











Read more from Benzinga

8Comments
Dec 18, 2013 5:58PM
avatar
yeah, and most large caps are spitting out meager dividends. 2-3% in dividends is the norm, and that's a scam on the shareholder. 
Dec 19, 2013 11:11AM
avatar

NO ABS today.He`s hanging out at a Goodwill in hopes of that secret Santa handing out

those $100 bills.Maybe his Congressman Charlie Rangel can get him some crappy basement

apartment in Harlem for Christmas.

Dec 19, 2013 11:38AM
avatar
The bitter far right acts like we should feel sorry for companies.
Dec 19, 2013 7:55AM
avatar

How Cash Hoarding by Entities helps America:

There are more than $700 TRILLION in debt derivatives outstanding. They are a pariah instrument of mass destruction. Simply force-close the doors of every cash-hoarding entity. Throw the executives off the roof. Kill their lawyers. Send letters (pay full price postage, helps the USPS) to shareholders with Draft Numbers in them. Advise-- when your number comes up, please report to the gas chamber to discuss your position OR return this letter (pay full price postage, helps the USPS) and sign off any rights to the hoarded cash. We will apply to the debt obligation. You will remain on the hook for any residual outstanding.

Dec 19, 2013 2:39AM
avatar
The bigger scam is the greedy shareholders! The biggest scam is Fraud Street!

End, ban and outlaw this outrages PONZI SCHEME NOW!

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