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6 Companies That Invest in Themselves

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For most of the past decade, investors have embraced the idea that companies should pay them first—via fat dividend checks or stock buybacks that bump up investors’ share of company profits—rather than funneling cash back into the business.

But investors are starting to get jazzed about capital spending, too, whether it’s the opening of a new data center, the retooling of an aging manufacturing plant, or increased spending on tech to boost competitiveness and help a business grow. Since the start of 2016, a basket of stocks of companies investing the most for growth—which includes capital expenditures (or “capex”), and research and development, have gained a cumulative 63%, compared with just 34% for firms that are returning cash to shareholders, according to Goldman Sachs data through early July.


Capital expenditures are on the upswing as many companies take advantage of savings from a lower tax rate and a more favorable depreciation schedule. The increase is not surprising, considering that the average age of corporate “fixed” assets—buildings, equipment, office furniture and the like—is now 16.3 years old, according to Strategas Securities. The last time assets were that old was back in the 1960s.

For 2018, capex spending by S&P 500 companies could climb to an estimated $690 billion, up 10% from 2017 and the highest dollar amount since 2014, predicts Goldman Sachs. That makes it a good time to buy into companies that are investing in themselves, like these six firms

SEE ALSO: 53 Best Dividend Stocks for 2018 and Beyond

Prices and other data are as of August 31.


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