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The U.S. Companies with the Most Cash – Money Morning

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.

The trend of companies in America hoarding cash keeps growing.

Liquidity moves markets!

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The 10 U.S. companies with the most cash reported a combined $540 billion in cash, cash equivalents, and short-term investments in their last quarterly reports. That’s up nearly 3.7% in just the last quarter.

These cash hoards are why activist investors like Carl Icahn have been pushing companies’ boards to share their wealth with stockholders.

In an October letter, Icahn called for tech giant Apple Inc. (Nasdaq: AAPL) to begin a $150 billion share buyback program. According to its Q3 earnings release on Sept. 28, Apple currently holds $40.4 billion in cash, cash equivalents, and short-term investments. That, according to Icahn, makes Apple ripe for a major buyback.

And that doesn’t even count Apple’s overseas holdings or other current assets.

The $40.4 billion Apple owns is huge, but that’s only good for No. 5 on our list of top cash-rich companies.

Here’s the list of top 10 “cash-rich” companies in the S&P 500, based on cash, cash equivalents, and short-term investments, plus how they used the cash they did spend:

  • General Electric Co. (NYSE: GE) reported cash and cash equivalents of $130.3 billion in September 2013, down slightly from $132.4 billion in June and $138 billion in March. Currently, GE offers its shareholders a dividend of $0.76 per year, or 2.8%. Early in 2013, it was reported that GE planned on buying back $10 billion of its stock from investors. The buyback was prompted by GE selling 49% stake in NBC Universal to Comcast Corp in March. In April, GE acquired the Texas-based oil company Lufkin Industries for $3.3 billion.
  • Microsoft Corp. (Nasdaq: MSFT) had a total of $80.6 billion in cash and short-term investments at the end of September. This was the fourth consecutive quarter of growth for the company that reported $77 billion in June, $74.4 billion in March, and $68.2 billion in December 2012. MSFT provides its shareholders with a 3% dividend, or $1.12 per year. In September, MSFT made headlines for its $40 billion stock buyback and 22% dividend increase. In the same month, Microsoft completed a $7.2 billion acquisition of Nokia Corp.’s (NYSE: NOK) cellphone business.
  • Google Inc. (Nasdaq: GOOG) is third with a cash and short-term investment hoard of $56.4 billion as of September. Google is another company that has added to its cash total in recent quarters, reporting $54.3 billion in June and $50.0 billion in March. Despite all that cash, GOOG does not issue a dividend and has never offered a shareholder buyback. The search engine mogul has a long history of acquisitions, and its purchase of Israeli navigation software Waze, for just shy of $1 billion in June 2013, was its largest in several years.

  • Cisco Systems Inc. (Nasdaq: CSCO) had $50.5 billion in its July statement, compared to $47.3 billion and $46.3 billion in the previous two quarters. Cash-rich Cisco uses part of that money to offer shareholders a quarterly dividend of $0.17. However, CSCO recently offered a buyback of just $2.8 billion, which was the smallest buyback the company has offered in 12 years. Since June, Cisco has acquired Composite Software Inc., Sourcefire, WHIPTAIL, and Insieme Networks.
  • Apple Inc. (Nasdaq: AAPL) has a cash pile of $40.4 billion as of September. While that total was good for No. 5 on the list, it was down from the $42.5 billion that AAPL had reported in the previous quarter. The tech giant doled out a dividend of $12.20 last year, good for a 2.3% yield. AAPL is currently in the middle of $60 billion buyback program, and the company bought back more than $16 billion worth of shares in the June quarter alone. In terms of acquisitions, AAPL has been busy since August purchasing tech companies Passif Semiconductor, Matcha.tv, and AlgoTrim.
  • Oracle Corp. (NYSE: ORCL) is a major software company that is sitting on a major lump of cash. In its August report, ORCL had approximately $39 billion in cash and short-term investments. This was a $7 billion increase from its previous quarter report of $32.2 billion. Oracle decided to double its dividend in June, to $0.12 per quarter. Despite the bump, shareholders still see a dividend yield of 1.4%. At the same time, the software giant announced a $12 billion buyback program. Like other major tech companies, Oracle has remained active on the acquisitions front, purchasing telecom hardware/software company Avaya, cloud-computing company Compendium, and cloud-based software company BigMachines since October.
  • Berkshire Hathaway Inc. (NYSE: BRK.A) not surprisingly owns a massive amount of cash, with a total of $42 billion reported in September. This was up from a June total of $35.6 billion, but down from a March total of $49 billion and a December 2012 total of $46.9 billion. BRK.A’s latest buyback was in December 2012 when the company purchased $1.2 billion worth of its stock. Berkshire Hathaway does not pay a dividend. In its most recent acquisition, Berkshire Hathaway’s Marmon Group purchased a beverage dispensing company from IMI Plc for $1.1 billion in October.
  • Ford Motor Co. (NYSE: F) held a total of $37.5 billion in cash and short-term investments this September, up from $36.6 billion in June and $34.3 billion in March. Ford provides its shareholders with a $0.10 quarterly dividend, or 2.4%. Ford has remained quiet in terms of mergers and acquisitions and has not offered a share buyback program.
  • Pfizer Inc. (NYSE: PFE) reported cash and short-term investments of $33.6 billion in its July statement, down from $35.3 billion in March and up from $32.6 billion in December 2012. The biopharmaceutical firm gives its investors a dividend of $0.96 annually, or 3.1%. This past June, Pfizer announced a $10 billion buyback program, which was the fourth major share repurchase for the company in the past several years. PFE had been in discussions to acquire Onyx Pharmaceuticals Inc. (Nasdaq: ONXX) in July, but a deal was never made.
  • General Motors Co. (NYSE: GM) rounds out the list of cash-rich companies with a total of $29.5 billion reported in September. This total marked an improvement from $26.9 billion in June, and $27.8 billion in March. Unfortunately for investors, GM does not pay a dividend, despite the huge cash hoard. In December 2012, GM announced a share buyback program of $5.5 billion from the U.S. Treasury. In September, Fiat agreed to purchase GM’s 50% holding in the two companies’ shared venture, VM Motori.

Earlier this year, Money Morning‘s Executive Editor William Patalon III detailed how a push from activist investors like Icahn can affect cash-rich companies like AAPL – which is up about 21% since Patalon’s analysis.

Here’s exactly how the “Icahn Effect” puts big money in your pocket…

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