Companies are increasingly sharing their record cash hoard with investors, and that trend should accelerate with a new wave of increased dividends and buybacks this quarter, according to a report from an investment bank.
Deutsche Bank says a strategy of investing in companies that are positioned to raise dividends typically outperforms by 8 percent on average. They say look for companies with high retained cash flow, relative to market cap, and high changes in cash, as a ratio to enterprise value, or market cap plus total debt. Also look for high cash balances as a ratio to total costs.
Even the strategy of buying the companies that increased dividends and buybacks the most over the past year could still outperform the market by 3 to 4 percent.
Some of the companies Deutsche Bank analysts say could raise payouts include Boeing , Pfizer , Mattel , Whirlpool and Humana . (See a longer list below.)
Industries most likely to hike payouts are health care, industrials, consumer discretionary and tech. Financials have the most excess cash, but they are unlikely to restore or raise dividends any time soon, given regulatory uncertainty.Page 1 of 4 | Next Page