Home / Business and Economy / US Corporates Boost Cash Amidst Spending Surge
US Corporates Boost Cash Amidst Spending Surge
30 Nov
Summary
- Russell 1000 companies hold $2.1 trillion in cash.
- Free cash flow reached $1.6 trillion in Q3.
- Shareholder payouts totaled $1.9 trillion, up year-over-year.
U.S. corporations demonstrated resilience in the third quarter by accumulating significant cash reserves, with the Russell 1000 index companies holding about $2.1 trillion. This occurred even as capital expenditures surged to their fastest pace in years. The Information Technology, Consumer Discretionary, Healthcare, and Communication Services sectors collectively account for nearly three-quarters of this corporate cash.
Companies consistently produced strong free cash flow, generating $1.6 trillion in the latest quarter, although the free cash flow yield decreased slightly to 2.8% due to rising market valuations. Operating cash flows climbed by 13.3% year-on-year to $2.7 trillion, while capital expenditures saw a substantial 15.9% increase, reaching roughly $1.1 trillion. This indicates a strategic reinvestment of net income into capital improvements.
Shareholder returns remained a primary allocation for corporate funds, with total payouts in the Russell 1000 reaching approximately $1.9 trillion, composed of $770 billion in dividends and $1.1 trillion in net buybacks. Both categories experienced year-over-year growth. While debt levels generally rose, the technology and health care sectors maintained steady figures, showcasing diverse financial strategies across industries.
