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Stockpickr) -- Who doesn't like cash? Apparently the answer is "investors." With the
S&P 500 up almost 5% in the first month of 2013, investors are too focused on capital gains to think about cash in their portfolios.
Don't get me wrong, I'm not advocating going to cash in your 401k. In fact,
I've been pretty bullish for the past six months or so. Instead, I'm suggesting that you look at the cash-rich stocks that are presenting themselves to investors in this market.
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Capital gains are great, but historically speaking, the majority of portfolio growth comes from other sources. Dividends, share buybacks and debt repurchases all inject value directly into your shares, and on a year-to-year basis, they also account for around 50% of annual stock performance. But only companies with cash that have the wherewithal to boost those payouts on command.
Plus, cash is a big deal because it's easy to value. While a nuclear power plant or a tire factory may have market values that fall in a wide range depending on the analyst crunching the numbers, a firm's checking account is pretty easy to get a handle on. And when that cash balance starts to balloon, it effectively provides a massive discount for shares.
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In short, cash provides options. Firms with cash can opt to increase shareholder value by paying a dividend or initiating a share buyback. Plus, they have the ability to take advantage of pricey M&A opportunities and internal investments.
Firms without cash can't.
Today, we'll focus in on
five firms that carry large cash and investment balances for investors.
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