CHICAGO (Reuters) – When a profitable company is sitting on tens of billions of dollars in idle cash, why can’t it automatically raise dividends to reward its shareholders? After all, with savings yields at dismal levels – and likely to remain so – those on fixed-incomes could use a boost.
But companies won’t share the wealth, and the reason why they won’t is an indictment of the U.S. government’s inaction on corporate tax loopholes.
The problem in Washington: Corporations are offshoring more than $2 trillion in corporate cash.
One thing is clear based on a Reuters study: Cash hoarding and stock buybacks have not done much to boost share prices.
Companies in the Standard & Poor’s 500 index of the largest industrial corporations are sitting on some $1 trillion in cash. Most of that money has done little or nothing to raise share prices, Reuters has found. Cash as a percentage of the S&P’s market value is nearly double what it was a decade ago – and that’s after one of the worst market crashes in history.