One Measure Of Corporate Cash Holdings Just Shy Of $1.5 Trillion
Supporting Image for Blog Post


View from the Observation Deck 

  1. In Q4'16, preliminary data puts S&P 500 Industrials (Old) cash and equivalents at a near-record high of $1.48 trillion (see chart). The all-time high was $1.49 trillion, set in Q3'16.
  2. From Q2'12 through Q2'16, cash holdings rose from $985.38 billion to $1.49 trillion, or a gain of 51.2%. The S&P 500 Index posted a cumulative total return of 81.01% over the same period, according to Bloomberg.
  3. What is interesting is that S&P 500 Index companies spent a combined $4.11 trillion on stock dividend distributions and stock buybacks over that same period (not shown in chart), according to S&P Dow Jones Indices.
  4. 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.
  5. Seeing cash holdings at an all-time high suggests that Corporate America, in aggregate, 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 a capitalization-weighted index comprised of 500 stocks used to measure large-cap U.S. stock market performance.

To Download a PDF of this post, please click here.

Posted on Thursday, April 6, 2017 @ 12:48 PM

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.