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Investors Business Daily
Investors Business Daily
Business
MATT KRANTZ

Ten Stocks Squat On 34% Of The S&P 500's Cash Pile

Giant S&P 500 companies keep tossing dividends and buybacks at investors. The reason is simple: They can't get rid of cash fast enough.

Already, just 10 stocks including Apple, Alphabet and Microsoft control more than a third of the $2.5 trillion in cash and investments sitting on S&P 500 nonfinancial companies' balance sheets, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge.

And this concentration continues following first-quarter profit reports, which included plans by several to boost payouts to investors. "Over the last five years, S&P 500 and Nasdaq 100 dividends have grown by 27% and 67%, (respectively)," said Nicholas Colas of Datatrek Research.

Massive Wealth Concentration

It's amazing how just 10 S&P 500 companies control so much of the S&P 500's wealth.

Apple alone is sitting on $162.3 billion in cash and investments. That's 6.5% of the total wealth held by the nonfinancial companies in the S&P 500. That's 14% higher than the $142.1 billion in cash possessed by Alphabet, which is No. 2 on the list and just started a dividend. Alphabet's cash pile is 5.7% of the total.

Meanwhile Microsoft, which has paid a dividend for years, clutches onto $94.8 billion in cash and investments. That's nearly 4% of the total.

Dividends Turn Into A Windfall

Surging cash piles are turning into a major source of S&P 500 returns.

Dividends from S&P 500 companies are up 27% in the past five years. They're up even more, 67%, in the Nasdaq 100, Colas says. That's much stronger than the 7% and 9% hikes in dividends the past five years in Europe and Japan, respectively.

Meanwhile, S&P 500 technology stocks are turning into a dividend growth engine. These companies upped their dividends the past five years by 23%. That's a key reason why investors scored a 182% total return on the sector in the past five years, higher than any other of the 11 S&P 500 sectors.

And when it comes to the highest dividend hike, 50% in the past five years, that title goes to the materials sector. The dividend hikes are a major part of the sector's total return of 84%.

"Sectors with well above-average dividend growth have tended to do quite well," Colas said. And judging by the S&P 500 giants' cash piles, there's more where those dividends came from.

S&P 500 Companies With Most Cash

Most recently reported cash and investments

Company Ticker Sector Cash & investments ($ billions) % of S&P 500 total
Apple Information Technology $162.3 6.5%
Alphabet Communication Services $142.1 5.7%
Microsoft Information Technology $94.8 3.8%
Amazon.com Consumer Discretionary $88.0 3.5%
UnitedHealth Group Health Care $78.6 3.1%
Exxon Mobil Energy $73.3 2.9%
Meta Platforms Communication Services $64.3 2.6%
General Electric Industrials $59.1 2.3%
Chevron Energy $53.9 2.1%
Elevance Health Health Care $43.9 1.7%
Sources: S&P Global Market Intelligence, IBD
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