America's large companies are wallowing in $1.2 trillion of cash, a record. Mutual fund managers can't be pleased about that, Michael Thompson, a managing director at Standard & Poor's, said earlier this week on CNBC. Part of their job is to decide when to take risk and when to seek safety. The corporate cash effectively forces them to remain less invested than they might like.
Expect heavyweight investors to increase their pressure on companies to use excess cash, or else part with it. The number of special dividends, whereby companies pay lump sums without signaling more payments to come, has recently nearly doubled from a year ago. Year-to-date, nearly half of S&P 500 members have taken positive action on regular dividends, either initiating or boosting them, versus just four negative actions. The ratio is 58-to-1 in favor of positive actions, up from about 3-to-1 over the past two years.
Source: SmartMoney
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