Companies are sitting on record piles of cash, and that’s good news for investors in certain companies.
According to David Kostin at Goldman Sachs, S&P 500 companies will spend $2.2 trillion in excess cash in 2016 and 46% of that will be returned to shareholders in the form of dividends or buybacks.
Additionally, the stocks of companies returning large amounts of cash to shareholders have done well over the past few years.
“Investing in companies returning cash to shareholders via a combination of buybacks and dividends has proven to be an effective long-term strategy relative to the market and other uses of cash,” wrote Kostin. “Since 1991, a sector-neutral basket of the S&P 500 stocks with the highest trailing combined dividend and buyback yields has returned an annualized 15.7% versus 13.8% for the top capex + R&D spenders and 12.8% for S&P 500.”
To help capture this trend, Goldman has assembled a list of the 50 top stocks for shareholder cash returns called the Total Cash Return basket.
We’ve compiled the top 14 stocks returning more than 12% yield to their investors. Each stock also includes the breakdown of returns from buybacks and dividends, as well as a comment on the returns from the company’s most recent earnings call.
Check out the companies dumping cash to investors below.
Marriott International: 12.0% total yield
Ticker: MAR
Industry: Consumer Discretionary
Buyback Yield: 10.7%
Dividend Yield: 1.3%
Executive Comment: “Given the considerable amount of capital recycling this year, combined with strong operating cash flow, we expect to return more than $2.25 billion to shareholders through share repurchases and dividends this year, a new record. Year-to-date through today, we’ve already returned over $2 billion to shareholders,” said CFO Carl Berquist.
Source: Goldman Sachs
VeriSign Inc.: 12.2% total yield
Ticker: VRSN
Industry: Information Technology
Buyback Yield: 12.2%
Dividend Yield: 0%
Executive Comment: “Our $2.75 per share dividend in 2011 was a 100% tax-free return of capital. We believe the long trend lines of growth in the top line and bottom line, along with the consistent track record in returning generated value to our shareholders through effective capital allocation and an efficient capital structure are what matter most to our shareholders,” said CEO James Bidzos.
Source: Goldman Sachs
Deere & Co.: 12.4% total yield
Ticker: DE
Industry: Industrials
Buyback Yield: 9.6%
Dividend Yield: 2.7%
Executive Comment: “As a closing thought, John Deere is well on its way to another good year and doing so in the face of some pretty significant headwinds. Our performance highlights our success establishing a wider range of revenue sources and a more durable business model,” said Susan Karlix, head of Investor Communications.
Source: Goldman Sachs
See the rest of the story at Business Insider
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