Corporate Cash Hoard Hits a Record $1.73 Trillion

Despite amassing more cash, U.S. nonfinancials also hit records in capital spending, dividends, and net share buybacks in 2014, says Moody's.
Matthew HellerMay 7, 2015
Corporate Cash Hoard Hits a Record $1.73 Trillion

U.S. nonfinancial corporations held a record $1.73 million in cash at the end of 2014, but corporate cash growth slowed to 4%, according to a Moody’s Investor Service report.

The survey confirmed that corporate America is kicking some of its cash-hoarding habit in favor of spending on capital investments, dividends, share repurchases, and acquisitions.

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corporate cashCapital spending ($937 billion), dividends ($394 billion), and net share buybacks ($289 billion) all reached record highs in 2014, Moody’s said.

A significant amount of cash, estimated at $1.1 trillion at year end, is being held overseas, up from $950 billion the previous year, as companies seek to avoid repatriation taxes.

“We expect that overseas cash balances will continue to grow unless tax laws are changed to encourage companies to repatriate money,” Richard Lane, lead author of the Moody’s report, told MarketWatch.

The top 50 holders of cash accounted for 63% of the total cash pile at year-end 2014, according to Moody’s. Apple led the way with $178 billion in cash, or 10.2% of all corporate cash holdings, followed by Microsoft ($90.2 billion), Google ($64.4 billion), Pfizer ($53.6 billion) and Cisco Systems ($53 billion).

“Apple’s $178 billion is greater than the aggregate cash of every industry sector excluding technology and health care/pharmaceuticals,” Moody’s said.

The tech giant’s cash balance has grown by $138 billion since 2009, and it has held the title of top cash holder since 2011. But Investor’s Business Daily noted that Apple has also piled up debt to support its share buyback and dividend programs, raising roughly $36 billion from the bond market since September 2012.

“Apple has turned to the bond market rather than use up cash that’s mostly held overseas, which would subject it to repatriation taxes,” IBD explained.

Cash balances grew 12% in 2013 and the growth rate has averaged 14% a year since 2009. Lane said he expects cash holdings to increase in the low single digits this year, largely driven by offshore cash.

“We expect that there’s going to be a grinding higher of cash in 2015,” he said.

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