Bank of America said in a note this week that US corporations can save the stock market by returning a lot of their cash to investors.
The S&P 500 is down more than 15% year-to-date, so investors are looking for any redeeming qualities to own stocks right now.
BofA said that the best hope for 2022 bulls is the ability of investors to remove $7.1 trillion in US corporate cash.
According to the bank, the number of US businesses that issue non-voting shares is at a 12-year low, while the number of businesses that buy back stock is at a 12-year low. BofA said that even as corporate debt levels hit their lowest level in decades, there was plenty of room to calm nervous shareholders.
The note said that until corporations get more friendly, shareholders are going on strike.
Recent actions by US corporations suggest they are willing to get more friendly with shareholders. BofA expects dividends to grow this year as stock splits are on the rise.
BofA expects companies to face pressure to compete for shareholders by raising dividends and buying back stock in the face of lower profit growth, falling productivity, and diminished prospects for profitable CAPEX.
In a tight labor market, companies are competing for talent, and a falling stock price doesn't help retention of employees who have stock-based compensation
BofA said that firms defending their stock price can protect themselves from becoming takeover targets or from losing talent in one of the most adverse labor markets in history.
BofA recommends that investors buy exchange traded funds that invest in companies that pay dividends, buy their stock and have a high free cash flow yield. The S&P 500 High Dividend Exchange Traded Fund and the Pacer US Cash Cows 100 Exchange Traded Fund are included.
High cash, low debt, limited voting, and low payouts have nowhere to go but up, according to BofA.
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