Home   Logon   Mobile Site   Research and Commentary   About Us   Call 1.800.621.1675 or Email Us       Follow Us: 

Search by Ticker, Keyword or CUSIP       
Blog Home
Bob Carey
Chief Market Strategist
Click for Bio

Follow Bob on Twitter Follow Bob on LinkedIn View Videos on YouTube

  One Measure Of Corporate Cash Holdings
Posted Under: Conceptual Investing
Supporting Image for Blog Post

View from the Observation Deck  
  1. In Q1'21, S&P 500 Industrials (Old) cash and equivalents stood at $1.81 trillion (see chart). 
  2. The all-time high was $1.89 trillion, set in Q4'20.
  3. From Q1'16 through Q1'21, cash holdings rose from $1.35 trillion to $1.81 trillion, or a gain of 34.07%. 
  4. The S&P 500 Index posted a cumulative total return of 112.71% over the same period, according to Bloomberg.
  5. What is interesting is that S&P 500 Index companies spent a combined $5.65 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 58.23% of the $5.65 trillion. 
  6. 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.
  7. Capex spending, for example, is expected to surge more than 12% year-over-year to $689.1 billion in 2021, based on 427 companies in the index offering spending estimates, according to Investor's Business Daily. Some political pundits, such as Senator Elizabeth Warren, would rather see companies reinvest their profits back into the business than use the capital for stock buybacks. 
  8. Seeing S&P 500 Index cash holdings continue to rise over time 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, August 3, 2021 @ 2:11 PM • Post Link Share: 
Print this post 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.
Search Posts
Market Commentary and Analysis
Market Commentary Video
Weekly Market Commentary
Weekly Market Watch
Monthly Talking Points
Quarterly Newsletter
Market Observations
Subscribe To Receive Email

US Stock Markets Ended July 30, 2021
US Economy and Credit Markets Ended July 30, 2021
A Snapshot Of Bond Valuations
A Snapshot Of Equity Fund Flows
US Stock Markets Ended July 23, 2021
US Economy and Credit Markets Ended July 23, 2021
Every Year Looks Volatile Compared To 2017
Passive vs. Active Fund Flows
US Stock Markets Ended July 16, 2021
US Economy and Credit Markets Ended July 16, 2021
Skip Navigation Links.
Search by Topic
Skip Navigation Links.

The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2023 All rights reserved.