Skip to main content

What are we looking for?

Being the patriots that we are, the harsh remarks this week from Bank of Canada Governor Mark Carney about companies sitting on piles of "dead money" sent us leaping into action. We thought it would be interesting to list the companies that are hoarding the largest amounts of cash with the least apparent reason.

Now, we will admit, ahem, that there is a little self-interest mixed in with our patriotic fervour. It occurs to us that if a company is flush with loonies, it might, at some point, be inclined to share its loot with shareholders. So we were particularly interested in firms that are well positioned to increase their dividends.

Story continues below advertisement

How we did it

We began by searching our Bloomberg database for corporations based in Canada that had more than $250-million in cash and near cash on their balance sheets at the end of the last fiscal year.

We were sympathetic to enterprises that were sitting on large amounts of cash because they were facing big threats to their business or were carrying large amounts of debt. We wanted to zero in on healthy, low-debt companies that didn't have such obvious reasons to stockpile their moolah.

To do that, we winnowed our list by looking only at firms that had made a profit in their most recent fiscal year, had produced free cash flow during that period, and had enjoyed an average annual return on equity of more than 10 per cent over the past five years. We also ruled out firms that had debt-to-equity ratios of more than 50 per cent.

Finally, we narrowed things down even further by looking only at companies that are paying out less than half of their profits as dividends (i.e. have a payout ratio of less than 50 per cent).

These cash-rich firms would seem to be in an excellent position to raise their regular payouts to shareholders.

What we found

Story continues below advertisement

Sixteen companies made our list, ranging from metals producer Inmet Mining to yoga-wear retailer Lululemon. If, like Mr. Carney, you want to prod Corporate Canada to disburse more of its cash, consider yourself briefed. If you're simply interested in looking for profitable firms sitting on large amounts of cash and in a good position to raise their dividends ... well, that works too.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

If your comment doesn't appear immediately it has been sent to a member of our moderation team for review

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.