Giant S&P 500 companies keep tossing dividends and buybacks at investors. The reason is simple: They can't get rid of cash fast enough.
Already, just 10 stocks including Apple, Alphabet and Microsoft control more than a third of the $2.5 trillion in cash and investments sitting on S&P 500 nonfinancial companies' balance sheets, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge.
And this concentration continues following first-quarter profit reports, which included plans by several to boost payouts to investors. "Over the last five years, S&P 500 and Nasdaq 100 dividends have grown by 27% and 67%, (respectively)," said Nicholas Colas of Datatrek Research.
Massive Wealth Concentration
It's amazing how just 10 S&P 500 companies control so much of the S&P 500's wealth.
Apple alone is sitting on $162.3 billion in cash and investments. That's 6.5% of the total wealth held by the nonfinancial companies in the S&P 500. That's 14% higher than the $142.1 billion in cash possessed by Alphabet, which is No. 2 on the list and just started a dividend. Alphabet's cash pile is 5.7% of the total.
Meanwhile Microsoft, which has paid a dividend for years, clutches onto $94.8 billion in cash and investments. That's nearly 4% of the total.
Dividends Turn Into A Windfall
Surging cash piles are turning into a major source of S&P 500 returns.
Dividends from S&P 500 companies are up 27% in the past five years. They're up even more, 67%, in the Nasdaq 100, Colas says. That's much stronger than the 7% and 9% hikes in dividends the past five years in Europe and Japan, respectively.
Meanwhile, S&P 500 technology stocks are turning into a dividend growth engine. These companies upped their dividends the past five years by 23%. That's a key reason why investors scored a 182% total return on the sector in the past five years, higher than any other of the 11 S&P 500 sectors.
And when it comes to the highest dividend hike, 50% in the past five years, that title goes to the materials sector. The dividend hikes are a major part of the sector's total return of 84%.
"Sectors with well above-average dividend growth have tended to do quite well," Colas said. And judging by the S&P 500 giants' cash piles, there's more where those dividends came from.
S&P 500 Companies With Most Cash
Most recently reported cash and investments
| Company | Ticker | Sector | Cash & investments ($ billions) | % of S&P 500 total |
|---|---|---|---|---|
| Apple | Information Technology | $162.3 | 6.5% | |
| Alphabet | Communication Services | $142.1 | 5.7% | |
| Microsoft | Information Technology | $94.8 | 3.8% | |
| Amazon.com | Consumer Discretionary | $88.0 | 3.5% | |
| UnitedHealth Group | Health Care | $78.6 | 3.1% | |
| Exxon Mobil | Energy | $73.3 | 2.9% | |
| Meta Platforms | Communication Services | $64.3 | 2.6% | |
| General Electric | Industrials | $59.1 | 2.3% | |
| Chevron | Energy | $53.9 | 2.1% | |
| Elevance Health | Health Care | $43.9 | 1.7% |
