Companies are sitting on record piles of cash, and that's good news for investors in certain companies.
According to David Kostin at Goldman Sachs, S&P 500 companies will spend $2.2 trillion in excess cash in 2016, and 46% of that will be returned to shareholders in the form of dividends ($432 billion) or buybacks ($608 billion).
Additionally, the stocks of companies returning large amounts of cash to shareholders have done well over the past few years.
"Investing in companies returning cash to shareholders via a combination of buybacks and dividends has proven to be an effective long-term strategy relative to the market and other uses of cash," wrote Kostin. "Since 1991, a sector-neutral basket of the S&P 500 stocks with the highest trailing combined dividend and buyback yields has returned an annualized 15.7% versus 13.8% for the top capex + R&D spenders and 12.8% for S&P 500."
To help capture this trend, Goldman has assembled a list of the 50 top stocks for shareholder cash returns called the Total Cash Return basket.
We've compiled the top-15 stocks returning more than 12% yield to their investors. Each stock also includes the breakdown of returns from buybacks and dividends, as well as a comment on the returns from the company's most recent earnings call.
Check out the companies dumping cash to investors below.
Marriott International: 12% total yield
Scott Olson/Getty Images
Ticker: MAR
Industry: Consumer Discretionary
Buyback Yield: 10.7%
Dividend Yield: 1.3%
Executive Comment: "Given the considerable amount of capital recycling this year, combined with strong operating cash flow, we expect to return more than $2.25 billion to shareholders through share repurchases and dividends this year, a new record. Year-to-date through today, we've already returned over $2 billion to shareholders," said CFO Carl Berquist.
Source: Goldman Sachs
Verisign: 12.2% total yield
Paul Sakuma/AP
Ticker: VRSN
Industry: Information Technology
Buyback Yield: 12.2%
Dividend Yield: 0%
Executive Comment: "Our $2.75 per share dividend in 2011 was a 100% tax-free return of capital. We believe the long trend lines of growth in the top line and bottom line, along with the consistent track record in returning generated value to our shareholders through effective capital allocation and an efficient capital structure, are what matter most to our shareholders," said CEO James Bidzos.
Executive Comment: "As a closing thought, John Deere is well on its way to another good year and doing so in the face of some pretty significant headwinds. Our performance highlights our success establishing a wider range of revenue sources and a more durable business model," said Susan Karlix, head of investor communications.
Executive Comment: "We continue to generate much more capital than we need to support our businesses, and consistent with our ongoing capital management strategy, we returned $939 million of excess capital to our shareholders this quarter through dividends of $189 million and common-share repurchases of $750 million, bringing total capital return to shareholders to almost $2.8 billion year-to-date," said CFO Jay Benet.
Source: Goldman Sachs
Express Scripts Holdings: 12.6% total yield
Joe Martinez, director of Phoenix-based community food bank, Mom's Pantry, accepts water, food and a $5,000 donation from Express Scripts' Tempe Pharmacy on Friday, June 21, 2013 in Tempe, Ariz.
Rick Scuteri/AP Images
Ticker: ESRX
Industry: Healthcare
Buyback Yield: 12.6%
Dividend Yield: 0%
Executive Comment: "My priorities from a financial perspective align with those of this leadership team — to maximize return on invested capital, manage expenses and working capital, and optimize our capital structure. Through our business model of alignment, we manage trend to lower cost for our clients and improve the health outcomes for our members, resulting in enhanced value for our shareholders," said CFO Eric Slusser.
Source: Goldman Sachs
Allstate: 12.7% total yield
Allstate insurance posts fourth quarter results as office shown in San Francisco
Thomson Reuters
Ticker: ALL
Industry: Financials
Buyback Yield: 10.4%
Dividend Yield: 2.4%
Executive Comment: "Since the beginning of 2011, we have repurchased 32% of year-end 2010 outstanding common shares, representing an $8.2 billion return of capital to common shareholders. As of September 30, we had $1.1 billion remaining on our current repurchase authorization, which is expected to be completed by July 2016," said CFO Steven Shebik.
Source: Goldman Sachs
Monsanto: 12.8% total yield
Plant Specialist Dustin McMahon hand pollinates genetically modified corn plants inside greenhouses housed on the roof of Monsanto agribusiness headquarters in St Louis, Missouri.
Getty Images/Brent Stirton
Ticker: MON
Industry: Materials
Buyback Yield: 11.3%
Dividend Yield: 1.5%
Executive Comment: "We remain committed to a balanced capital-allocation strategy, balanced between continued share repurchases, dividends, capital investments, and investments in technology. This should allow us to operate with flexibility to invest in high-growth opportunities that support our strategy while remaining committed to a solid investment-grade credit rating to allow access to commercial paper," said CFO Pierre Courduroux.
Executive Comment: "In the meantime, we are enjoying the benefit of strong performance in our owned and leased business. On return of cash, we repurchased 1.3 million shares in the third quarter for a total cost of $100 million and paid a quarterly dividend of $0.375 per share or approximately $64 million in total. Year-to-date, we have returned $328 million through repurchases and $192 million through dividends for a total of $520 million. We're on track to deliver our stated goal to return $600 million to shareholders this year," said CFO Thomas Mangas.
Executive Comment: "That strategy is to invest in our businesses, manage our balance sheet, and return cash to shareholders through a competitive dividend and share repurchases. Our first priority, of course, continues to be investing in our business. We have increased our IRAD and capital spending to support our customers' needs for innovation and affordability. We also have greater visibility into a more favorable opportunity set ahead of us. We believe our portfolio is well-aligned for long-term profitable growth," said CEO Wesley Bush.
Source: Goldman Sachs
Navient: 16.7% total yield
Youtube/Navient
Ticker: NAVI
Industry: Financials
Buyback Yield: 13.4%
Dividend Yield: 3.3%
Executive Comment: "Our philosophy here and practice has been to, as we generate excess capital, both through earnings and through the release of capital from the amortization of our loan portfolios that that would be returned to shareholders through share repurchases and dividends. I don’t think anything has changed here on that side of the equation. Clearly, the current stock price would encourage us and makes it far more attractive for us to be more aggressive on that front," said CEO Jack Remondi.
Source: Goldman Sachs
CBS: 17% total yield
The CBS building in New York
Thomson Reuters
Ticker: CBS
Industry: Consumer Discretionary
Buyback Yield: 16.1%
Dividend Yield: 0.9%
Executive Comment: "Plus, as we invest in our future with new content and distribution initiatives, we are posting EPS growth year after year, quarter after quarter. At the time, we continue to steadily return our excess cash to our investors through share buyback and dividends. So we're delivering strong results for our shareholders today and we're setting ourselves up for even stronger results in the future," said COO Joseph Ianniello.
Source: Goldman Sachs
Bed Bath and Beyond: 18.7% total yield
Getty Images
Ticker: BBBY
Industry: Consumer Discretionary
Buyback Yield: 18.7%
Dividend Yield: 0%
Executive Comment: "We are confident that we're making the appropriate investments to position our company for long-term profitable growth and to further enhance shareholder value. To that end, our board of directors has authorized today a nearly $2.5 billion share-repurchase program that will commence after the completion of our current $2 billion. Our board took this action based upon its continued confidence in our company’s long-term growth potential, financial outlook, and cash-flow generation," said CEO Steven Temares.
Source: Goldman Sachs
Motorola Solutions: 19.9% total yield
A woman takes a picture in front of a Motorola logo before the worldwide presentation of the Moto G mobile phone in Sao Paulo
Thomson Reuters
Ticker: MSI
Industry: Information Technology
Buyback Yield: 18%
Dividend Yield: 1.8%
Executive Comment: "We remain on track for approximately $1 billion of operating cash flow and $800 million of free cash flow for the full year. We repurchased $2.1 billion of stock and paid out $70 million in dividends during the quarter. This resulted in a net debt position of $2.2 billion at the end of Q3," said CFO Gino Bonanotte.
Source: Goldman Sachs
Juniper Networks: 21.7% total yield
A woman walks past a banner with the logo of Juniper Networks Inc. covering the facade of the New York Stock Exchange.
Brendan McDermid/Reuters
Ticker: JNPR
Industry: Information Technology
Buyback Yield: 20.3%
Dividend Yield: 1.4%
Executive Comment: "CapEx for the quarter also increased to $71 million, as we focused on investments to drive long-term productivity and support continued innovation and developments of new products. We repurchased $50 million of shares and paid $39 million of dividend. Through Q1 of 2014, inclusive of share repurchases and dividends, we returned approximately $3.5 billion of capital to shareholders, against our commitment to return $4.1 billion by the end of 2016," said CFO Robyn Denholm.
Source: Goldman Sachs
KLA-Tencor: 30.4% total yield
TGPRN KLA-Tencor Corporation
Ticker: KLAC
Industry: Information Technology
Buyback Yield: 5.1%
Dividend Yield: 25.3%
Executive Comment: "Additionally in July, we announced that our board of directors had authorized an increase in the level of our quarterly dividend to $0.52 per share, the seventh increase in our regular dividend since it was first instituted in 2005. We believe this reflects the board and management's confidence in our long-term growth strategies and target business model, and is consistent with our ongoing focus of returning value and rewarding our long-term stockholders for their commitment to KLA-Tencor," said CFO Bren Higgins.
