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This article is a response to a comment I got from my article about shares outstanding for the Dow Jones Industrial Average (DIA). The comment was about whether current share buybacks are being driven by cash and cash flow, rather than by debt. Therefore, in this article I will look at debt and cash levels for each of the 30 stocks in the Dow.

Data

I went to the Morningstar.com balance sheet page for each stock in the Dow to collect data on the amount of cash and long-term debt each company has. I also used the same data from my first article, for shares outstanding, but only for the last 5 years because that is how far back the data goes for each cash and debt level.

The Shares outstanding data table below shows the share count for each stock, and whether over the last 5 years that company has decreased or increased shares outstanding. Out of the thirty Dow stocks, twenty lowered their share counts in the last five years.

Shares Outstanding

2008

2009

2010

2011

2012

Lower Shares?

AA

818

935

1025

1161

1076

No

AXP

1157

1171

1195

1184

1141

Yes

BA

729

713

744

753

762

No

BAC

4612

7729

9790

10255

10841

No

CAT

628

626

650

666

670

No

CSCO

6163

5857

5848

5563

5404

Yes

CVX

2050

2001

2007

2001

1950

Yes

DD

907

909

922

941

942

No

XOM

5149

4832

4897

4875

4628

Yes

GE

10098

10615

10678

10620

10564

No

HD

1686

1692

1658

1570

1511

Yes

HPQ

2567

2437

2372

2128

1974

Yes

IBM

1382

1341

1287

1214

1155

Yes

INTC

5748

5645

5696

5411

5160

Yes

JNJ

2836

2789

2789

2775

2813

Yes

KO

4672

4658

4666

4646

4584

Yes

JPM

3605

3880

3977

3920

3822

No

MCD

1146

1107

1080

1045

1020

Yes

MMM

707

707

726

719

703

Yes

MRK

2145

2273

3120

3094

3076

No

MSFT

9470

8996

8927

8593

8506

Yes

PFE

6750

7045

8074

7870

7508

No

PG

3317

3154

3099

3002

2941

Yes

T

5958

5924

5938

5950

5821

Yes

TRV

607

569

483

421

390

Yes

UNH

1241

1179

1131

1087

1046

Yes

UTX

956

929

923

907

907

Yes

VZ

2850

2841

2833

2839

2862

No

WMT

3951

3877

3670

3474

3389

Yes

DIS

1948

1875

1948

1909

1818

Yes

The Long-Term debt table below shows the debt levels for each stock and whether that company has decreased or increased the debt it has outstanding over the last 5 years. Out of the thirty Dow stocks, eight lowered their debt level in the last five years.

Long-Term Debt

2008

2009

2010

2011

2012

Lower Debt?

AA

8509

8974

8842

8640

8311

Yes

AXP

60041

52338

66416

59570

58973

Yes

BA

6952

12217

11473

10018

8973

No

BAC

268292

438521

448431

372265

275585

No

CAT

22834

21847

20437

24944

27752

No

CSCO

6393

10295

12188

16234

16297

No

CVX

5742

9829

11003

9684

11966

No

DD

7638

9521

10133

11713

10465

No

XOM

7025

7129

12227

9322

7928

No

GE

330067

338215

323383

272717

236084

Yes

HD

9667

8662

8707

10758

9475

Yes

HPQ

7676

13980

15258

22551

21789

No

IBM

22689

21932

21846

22857

24088

No

INTC

1886

2049

2077

7084

13136

No

JNJ

8120

8223

9156

12969

11489

No

KO

2781

5059

14041

13656

14736

No

JPM

403083

266318

304978

256775

249024

Yes

MCD

10186

10560

11497

12134

13633

No

MMM

5166

5097

4183

4484

4916

Yes

MRK

3943

16075

15482

15525

16254

No

MSFT

0

3746

4939

11921

10713

No

PFE

7963

43193

38410

34931

31036

No

PG

23581

20652

21360

22033

21080

Yes

T

60872

64720

58971

61300

66358

No

TRV

5938

6165

6519

6255

6350

No

UNH

11338

9009

11023

13101

16485

No

UTX

9337

8257

10010

9501

21597

No

VZ

6959

55051

45252

50303

47618

No

WMT

31349

33231

40692

44070

38394

No

DIS

11110

11495

10130

10922

10697

Yes

The cash table below shows the cash levels for each stock and whether that company has increased or decreased the cash they have on their balance sheet, over the last 5 years. Out of the thirty Dow stocks, twenty-six have increased the amount of cash they have in the last five years.

Cash

2008

2009

2010

2011

2012

Higher Cash?

AA

762

1481

1543

1939

1861

Yes

AXP

8128

11478

16055

24086

22250

Yes

BA

3279

11223

10517

11272

13558

Yes

BAC

32857

121339

108427

120102

129446

Yes

CAT

2736

4867

3592

3057

5490

Yes

CSCO

26235

35001

39861

44585

48716

Yes

CVX

9560

8822

17070

20071

21913

Yes

DD

3704

6137

6801

4019

4407

Yes

XOM

32007

10862

7827

12664

9582

No

GE

89633

124201

122896

131875

125866

Yes

HD

525

1427

545

1987

2494

Yes

HPQ

10246

13334

10934

8043

11301

Yes

IBM

12907

13974

11651

11922

11129

No

INTC

8681

9272

21885

14837

18162

Yes

JNJ

12809

19425

27658

32261

21089

Yes

KO

4979

9213

11337

14035

16551

Yes

JPM

165034

26206

27567

59602

175537

Yes

MCD

2063

1796

2387

2336

2336

Yes

MMM

2222

3784

4478

3680

4531

Yes

MRK

5486

9605

12201

14972

16141

Yes

MSFT

23662

31447

36788

52772

63040

Yes

PFE

23731

25969

28012

26758

32708

Yes

PG

3541

4781

2879

2768

4436

Yes

T

1792

3802

1437

3185

4868

Yes

TRV

350

255

200

214

330

No

UNH

7426

9800

9123

9429

8406

Yes

UTX

4327

4449

4083

5960

4819

Yes

VZ

10291

2499

7213

13954

3563

No

WMT

7275

7907

7395

6550

7781

Yes

DIS

3001

3417

2722

3185

3387

Yes

Thoughts & Observations

Looking through the data, I found only five companies which have the combination of lowering share count, decreasing debt levels, and increasing cash levels. Those companies are: American Express (AXP), Home Depot (HD), 3M (MMM), Procter & Gamble (PG), and Disney (DIS).

In addition, what is interesting to look at is the companies that have lowered their share count but done so by using cash and debt. Out of the thirty Dow stocks, three companies met the criteria of decreasing share count but at the same time have increasing debt and lower cash. Those companies are: Exxon Mobil (XOM), Intl. Business Machines (IBM), and Travelers (TRV).

The most interesting piece of data I noticed was that one Dow stock has increased its share count, increased debt levels, and lower cash-- that company is Verizon (VZ). This surprised me but once I thought about it, the data made sense because Verizon has been spending its cash, and using debt to finance expansion in its business by expanding network infrastructure, to accommodate demand from smart phones.

Closing thoughts

I believe the companies that had the unique combination are definitely worth a deeper look because, at least for the last 5 years, these companies have shown the ability to generate enough cash and cash flow to buyback shares without increasing debt, while at the same time adding cash to the balance sheet. I believe Verizon could also be worth a look because it is investing heavily in its business, and that investment should pay off due to the increasing use of smart phones.

Disclaimer

Source: Share Buybacks Driving The Dow Higher: Part 2