One Measure Of Corporate Cash Holdings

Bob Carey
Chief Market Strategist

Bio
X • LinkedIn

Blog Home

Send Us Your Comments And Questions

RSS Feed

One Measure Of Corporate Cash Holdings

Posted Under: Conceptual Investing

View from the Observation Deck

In Q3'20, S&P 500 Industrials (Old) cash and equivalents stood at a near-record high of $1.88 trillion (see chart). The all-time high was $1.89 trillion, set in Q2'20.
From Q3'15 through Q3'20, cash holdings rose from $1.30 trillion to $1.88 trillion, or a gain of 44.62%. The S&P 500 Index posted a cumulative total return of 93.80% over the same period, according to Bloomberg.
What is interesting is that S&P 500 Index companies spent a combined $5.59 trillion on stock dividend distributions and stock buybacks over that same period (not shown in chart), according to S&P Dow Jones Indices. Stock buybacks accounted for 58.68% of the $5.59 trillion.
Keep in mind that S&P 500 companies also utilize capital for such things as mergers and acquisitions, investment in plants and factories, and to purchase software and equipment.
Seeing S&P 500 Index cash holdings continue to set all-time highs suggests that Corporate America, overall, is on solid footing, in our opinion.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. The S&P 500 Index is an unmanaged index of 500 stocks used to measure large-cap U.S. stock market performance.

Download a PDF of this post, please click here.

Posted on Tuesday, January 19, 2021 @ 12:24 PM • Post Link

Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

Most Current Posts

<<< Newer Posts • Older Posts >>>

Search Posts

MARKET ANALYSIS

Market Commentary and Analysis
•	Market Commentary Video
•	Monthly Talking Points
•	Quarterly Newsletter
•	Market Observations

Subscribe To Receive Email

PREVIOUS POSTS
•	Every Year Looks Volatile Compared To 2017
•	A Snapshot Of Bond Valuations
•	A Snapshot Of How Stocks Have Performed So Far In This Millennium
•	The Only Constant Is Change
•	Commodity Prices Rising As The U.S. Dollar Falls
•	A 20-Year Snapshot Of Bond Yields
•	The Pop In Treasury Returns Likely Not Sustainable
•	A Snapshot of Growth vs. Value Investing
•	A Snapshot Of Top-Line Growth Projections
•	Homebuilder-Related Stocks Have Finally Surpassed Their 2005 Peak