Divvies, Buybacks, M&A – Corporate Cash Being Put To Work At Last

We all know the negatives…homeless people begging from other homeless people, tent cities, the continent of Europe is running out of money or something, Nicholas F*ckin’ Cage is bankrupt supposedly, our grandkids’ grandkids will be paying off debt originally incurred by Jimmy Cayne while he like totally spaced at the goddamn Bridge table for a decade, etc.

But here are three market positives from USA Today’s Matt Krantz:

Recovering dividends. One of the brightest trends is the cash payments made by companies to shareholders. February was the best month for dividends in two years with 47 companies in the Standard & Poor’s 500 index either boosting or starting to pay a dividend, and just one company, Tesoro, cutting its payout, S&P’s Howard Silverblatt says. The trend continued Wednesday when General Dynamics boosted its quarterly dividend by 10.5%.

Rising buybacks. Companies are famous for buying back their stock at the wrong time, but they’re at least confident enough to use some of their cash. Stock buybacks are expected to be 37% higher in the fourth quarter compared with the third quarter of 2009, Silverblatt says. For companies, “There’s no better way than dividends and buybacks to prove to everyone, ‘I’m OK,’ ” he says.

Increasing M&A activity. The track record for companies successfully buying other firms is spotty, but again, an uptick in M&A shows confidence and appetite for risk. The number of U.S. deals is up 13% this year to 1,579, Dealogic says. And the dollar value of deals targeting U.S. companies is up 46% to $144 billion, Thomson Reuters says.

According to the article, US companies have over $800 billion in cash.  While the banks use their cash to buy treasuries like the cowards they are rather than make loans, the rest of corporate America is getting back to business.

Good stuff.


Dividends, Buybacks and Mergers Are Good Signs For Investors (USAToday)

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