This situation should only get better this year. The interest rate has already risen by a quarter of a percent and the Fed is expected to push the interest rate upwards – from the current target of 4.75%-4.5% towards at least 5%.
Of all these companies, Apple has the highest holdings of cash and marketable securities. More precisely – 165 billion dollars as of the end of the year. Pay attention to the numbers: it generated $868 million in interest and dividend income in the fourth quarter – a 33% increase compared to $650 million in the same period last year. The amount of cash holdings alone was $203 billion higher.
Apple sees this as less beneficial than Berkshire. Buffett defends himself because he holds most of Berkshire’s cash and makes short-term investments of less than a year. He put $129 billion in short-term US Treasuries.
Berkshire’s interest income jumped to $896 million in the fourth quarter, compared to $131 million in the same period last year. Given current interest rates, Berkshire could generate more than $5 billion in interest income this year.
Apple invests mainly in corporate bonds. It posted a loss of almost 13 billion dollars as of the end of the year.
In the alphabet the story is different. It had $113 billion of cash and marketable securities at the end of the year and its interest income rose 74% in the fourth quarter to $659 million. Microsoft has $100 billion in cash and short-term investments. It saw its interest and dividend income rise 39% in the fourth quarter to $700 million.
Now, it will be interesting to look for the continued increase in interest income of these companies in the coming quarters as well.
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