Morgan Stanley says certain companies have an advantage over others as investors seek returns from companies with deep pockets. Strategist Todd Castagno said in a note Tuesday that the company’s cash balance increased slightly despite the large increase in capital spending in the third quarter. He said Russell 1000 cash balances rose to $2.1 trillion in the quarter. Total shareholder return, including dividends and share buybacks, also increased slightly. That rose to $1.9 trillion, up 1% quarter over quarter and 9.2% year over year, Castaño said. Among these gains, $770 billion in dividends were paid, an increase of 6.2% year-on-year, and net share buybacks amounted to $1.1 trillion, an increase of 11.3% year-on-year, he added. “Dividends provide investors with immediate income, but are typically more restrictive than independent share buyback authorizations,” Castagno wrote. “Share buybacks may indicate that management believes the company’s stock is undervalued and that the total number of shares outstanding may decline.” He noted that higher shareholder yields suggest a company is of higher quality than companies with lower earnings. To accomplish this objective, Castagno screened Russell 1000 companies with a total shareholder return greater than 6%. Additionally, these companies have a trailing 12-month dividend coverage ratio of over 2 and a positive compound annual growth rate of net income over the next two years. Finally, both companies are expected to have positive free cash flow CAGR over the next two years and have investment grade credit ratings. Here are some stocks that have risen in value. Marathon Petroleum’s total shareholder return is approximately 18%. The oil refiner, which yields 2.11%, recently announced a 10% quarterly dividend increase, payable on December 10th. In the third quarter, the company returned $926 million in capital to investors, including $650 million in stock repurchases. The stock price has increased about 37% this year. HP also made a list. The computer and printer maker has a dividend yield of 4.93%. The total shareholder return rate is 15%. HP has struggled this year, posting losses of more than 25%. On Tuesday, the company announced disappointing profit forecasts for this year and announced it would cut 10% of its workforce. However, fourth quarter results exceeded expectations. “As we look to the future, we see significant opportunity to incorporate AI into HP to accelerate product innovation, improve customer satisfaction and increase productivity,” HP CEO Enrique Lores said in an earnings call. The company returned $1.9 billion to shareholders in the form of dividends and stock buybacks in fiscal 2025. Meanwhile, FedEx’s first-quarter profits and sales exceeded expectations when the company announced its results in September. FedEx also completed a $500 million share repurchase during the quarter. The package delivery company is in the midst of spinning off FedEx Freight into a new publicly traded company, expected to be completed in June 2026. FedEx’s total shareholder return is 7%. The stock price has fallen nearly 3% since the beginning of the year. Finally, CVS Health has a total shareholder return yield of 6.6%. The drugstore chain and health insurance company significantly beat expectations for third-quarter profit and sales when it reported its results last month. Due to the improvement in the insurance division, the company also raised its full-year adjusted profit forecast. Chief Executive David Joyner, who took the top job last October, has been working to turn the company around by cutting costs and changing leadership. “(I) couldn’t be happier with the fact that we had an uptick and an uptick in three quarters this past quarter. Obviously, as we look to the fourth quarter, we feel really, really good to end the year on a positive note,” Joyner said. CVS stock will rise 78% in 2025.
