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How to get the best return on Excess Corporate Cash
When interest rates start to go down again (and they will) do this to make your best returns.
I began working as a stockbroker at Merrill Lynch in the late 1970s. As a rookie broker I was expected to cold-call prospects offering the newest stock underwriting of the firm. I remember calling trying to get people to buy the latest issue of Public Service of Colorado (the electric utility company) at $20/share. A hundred share lot (the minimum purchase) would cost them $2,000 and my commission would be $20. It was like pulling teeth to get them to part with that sum.
Previously I had worked for a Fortune 500 company that would spend $1,000,000 on an idea just to see if it worked. I quickly realized that I would be better off working with that sort of client. I began investigating ideas that would be of interest to US corporations that had cash to invest.
At that time, dividends earned by a US corporation from another US corporation were 80% tax free. Later this was reduced to 70% and now I understand it is at 50% tax free.
