The US Companies Most Loyal to Stockholders
NEW YORK – January 14, 2019
One of the reasons for the high relative capitalization (in terms of financial multipliers) of American business is the highest rate of deductions to shareholders. On average, all public companies receive about 53-55% of operating cash flow. No country has such indicators. This is the operating cash flow that is the available resource from which capital investments, merger and acquisition costs, and shareholder contributions (buyback and dividends) are formed.
But who pays the most in the US by name?
Over the past 10 years (from 2008 to 2017), the largest US companies have paid investors over $7.2 trillion! In absolute terms, the leaders are:
Exxon Mobil - $250 billion
Apple - $227 billion (started to pay the last 5 years and is the absolute leader in payments to investors)
Microsoft - $179 billion
International Business Machines - $141 billion
AT & T - $138 billion
General Electric - $135 billion
Johnson and Johnson - $128 billion
Pfizer - $124 billion
Procter and Gamble - $123 billion
Wal-Mart Stores - $122 billion
High spending on shareholders is not always a pledge of high shareholder value and a vivid example of this is IBM and General Electric, whose shares have been trampled down to practically nothing, being at their lows for many years. Two symbols of corporate America, the oldest corporations and legislators of industrial, technological and corporate standards in the past are experiencing the most dramatic times in their history with a consistent, long trend of decreasing revenue and profitability, even entering the loss zone.
In 2007, General Electric was the most profitable corporation in the world (under $50 billion in operating income), in second place after Exxon Mobil and its performance improved since the mid-80s, though after the crisis of 2008-2009 they failed to adapt to the new format and market demands, coupled with mass management miscalculations on industrial positioning and resource allocation.
IBM is also not at its best. Revenue has been declining since 2011, and the operating profit from 2012. IBM profitability is at a 15-year low.
For 10 years, IBM has 77% of the total available operating flow to buyback and dividends, and General Electric 52%. Perhaps, more moderate investor appetites and a shift in management priorities from the stock issue to the development of companies could save the business. Bankruptcy is out of the question, as even in such a state there is more than enough money; it is enough just to temper the fervor in the insane utilization of financial resources into the market.
And now the list of companies (from the first 200 top in terms of revenue) with a consistently high rates of dividend and buyback payments for 10 years to the operating cash flow for 10 years.
Companies such as McDonald's, Philip Morris (Marlboro cigarettes), Nike, Colgate-Palmolive, Coca-Cola give literally everything they earn to shareholders, almost to the penny. McDonald’s and Philip Morris even borrow money. If the figure is above 100%, then companies do not have the opportunity to spend a single dollar on investments in business development without attracting debt. As can be seen, companies from the consumer sector, industrial companies for commercial purposes, and medicine are particularly generous to shareholders.