For Beat-the-Market Safety Plays, Consider Investing in These Five ‘Cash-Cow’ Companies

When it comes to investing, finding a company that has a lot of money in the bank can be, well, money in the bank. The logic is sound: Especially during times of economic uncertainty, companies that have a lot of cash on hand have the flexibility to do all sorts of things - most of them ultimately beneficial to shareholders because they help increase earnings and lead to higher stock prices. For example, cash-rich firms can invest in new plants and equipment, fund research-and-development (R&D) initiatives for new products, or finance acquisitions that will increase market share or expand their geographic reach. So-called "cash-cow" firms can also use their accumulated reserves to pay down or eliminate existing debt, increase annual dividends, buy back stock - or simply hold the money as a cushion against further economic downturns. Excess cash in the vault can transform smaller companies into attractive takeover targets, providing the shareholders of those target companies with quick and sizeable capital gains.