Triple Your Gains With These 5 Cash-Rich Companies
BALTIMORE (Stockpickr) -- Want to triple your investing returns this summer? Then tell your portfolio to show you the money...
Read More: Warren Buffett's Top 10 Dividend Stocks
Put simply, cash still matters in 2014. That's something that's been made very clear by the barrage of M&A activity that's hit the books in the last quarter. Cash also provides a defense against market corrections – firms with large cash positions on their balance sheets have a fundamental backstop that lets them hold their ground better than the rest of the market. But don't think for a second that protecting your portfolio with cash-rich stocks comes at the expense of performance...
In fact, it's a capital gains booster: over the last decade, the top tier of cash-rich stocks worldwide generated total returns of 297%. That's triple what the S&P 500 earned over the same period.There's no shortage of cash floating around the market right now – in total U.S. stocks hold more than $1.53 trillion. That means that more than a quarter of the S&P's current price tag is covered by cash in the bank. As a percentage of total assets, those are levels not seen since the 1970s. The benefits of big cash holdings come from what they enable companies to do. 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. Only companies with lots of cash that have the wherewithal to boost those payouts on command. 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.
Read More: Do You Own These 5 Toxic Stocks? Watch Out! That's especially true in the tech sector, where firms have been hoarding cash at a rapid pace. So today, we're taking a look at five firms that fit the tight set of quantitative criteria that beat the S&P by 300% in the last decade...
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