US Companies Increase Their Cash Cushion (MS, PM, HD, LOW)
US companies are deleveraging their financial structure. According to a report released by Morgan Stanley (NYSE: MS), the companies have increased their cash balance to approximately 30% of their debt in the fourth quarter. The figure stood at 25% in the third quarter. Morgan Stanley (MS) has based its report on Q4 results from over 200 nonfinancial, investment-grade US companies.
The companies are using their cash pile to increase shareholder value. Several major companies have announced dividend increases as well as share buyback programs. Tobacco giant Philip Morris (NYSE: PM) has announced a $12 billion share buyback plan, whereas Home Depot (NYSE: HD) has raised its quarterly dividend by 5%. Lowes (NYSE: LOW) is also doing a $5 billion share buyback plan.
Morgan Stanley has said that better expected earnings prospects are helping companies in further lowering their leverage.
