Companies in the S&P 500 index are returning cash to their shareholders at a historic rates, according to a new report from Goldman Sachs. In the 12 months ended March 31, firms in the S&P 500 index spent 103.8 percent of their free cash flow on stock buybacks and dividends, up from 101.9 percent in the fourth quarter of last year.
This is the first time that the S&P companies have spent more cash than they earned on payouts since the period between September 2006 and March of 2008. At that time, there was a seven-quarter stretch during which S&P 500 companies paid out more to shareholders than they earned in cash.
Not surprisingly, these corporations now have a lot less cash on hand. Overall, during the past year, nonfinancial companies in the S&P 500 have seen their cash levels decline by $272 billion, a 15 percent decline that represents the largest drop since at least 1980.
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