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TheStreet Open House

5 Ways to Create Shareholder Value in 2014

Stock quotes in this article: AAPL, DB

NEW YORK (TheStreet) -- Deutsche Bank equity strategist David Bianco has five compelling ways for S&P 500 companies to increase their stock price in 2014 after broader indices gained nearly 30% last year in a still bumpy U.S. economic recovery. Bianco's recommendations include strategies to squeeze out further expense reductions after years of cost cutting and ways of putting corporate cash to work in an economic manner for shareholders.

To improve share price performance, Bianco recommends S&P 500 index CFO's increase their net debt, raise dividend payout ratios, lower pension burdens through lump-sum settlements, project more realistic investment return hurdles on capital investment projects and look to offshore their headquarters as a means to "improve tax efficient access to global cash flow."

"These actions relate to capital structure, investment and risk budgeting, shareholder distributions, and long-term tax planning," Bianco said in a Monday note to clients.

Those recommendations aren't likely to surprise many C-Suites, who've pulled similar levers in recent years to generate record profits in a still-weak growth environment. Four of the five ways at creating shareholder value also likely aren't likely to lead to any meaningful employment gains, raising the prospect of a worsening disconnect between U.S. corporate performance and the wider economy.

Corporate profits continue to reach new records, even as unemployment across the U.S. remains high and middle class incomes stagnate.

Still, in an environment where activist and private equity investors are ready to pounce on inefficiently run companies, many C-Suites are likely to heed Bianco's advice. For instance, Apple (AAPL), one of the largest companies in the U.S. by market cap, has spent recent years implementing financing and tax strategies that accomplish most of Bianco's recommendations.

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