Gilead Sciences, Inc. (GILD), American International Group, Inc. (AIG): The Biggest Companies That Don’t Pay Dividends — But May Be About To

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This month marks the five-year anniversary of an era many would rather forget.

The S&P 500 fell nearly 10% in June 2008, and investors began to brace for an eventual market crash later in the year. That was also a time when companies sealed the hatches and girded for tough days ahead, in many instances eliminating dividends that had been in place for many years.

Gilead Sciences, Inc. (NASDAQ:GILD)

Though many companies eventually restored those dividends, some companies are only now contemplating such a move. By following a few simple markers, you can make some well-informed predictions about which companies could soon issue a fresh dividend.

Before digging into these markers, let’s take a quick look at the 15 largest companies in the S&P 500 that do not currently pay a dividend.

Right away, we can eliminate certain types of companies from contention, simply because they have had many decades to pursue a dividend policy, and never have done so. Warren Buffett‘s Berkshire Hathaway Inc. (NYSE:BRK.A) is a perfect example. His company is such an active acquirer of businesses that retaining cash flow is a key ingredient of success.

This, of course, may change when Buffett relinquishes control. After all, Berkshire Hathaway Inc. (NYSE:BRK.A) has now generated more than $10 billion in free cash flowin each of the past four years, after never having generated more than $7.2 billion in free cash flow in any prior year in its history. The company’s gross cash balance reached $47 billion at the end of 2012, and the topic of a dividend is surely raised at the company’s board meetings.

For that matter, it’s unwise to expect an imminent dividend from the other two $100 billion companies on the list, Amazon.com, Inc. (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOG). These companies are aggressively investing in future growth initiatives in their bid to conquer the technology landscape.

Neither company is showing signs of maturity just yet — but it’s hard to ignore Google Inc (NASDAQ:GOOG)’s ever-rising free cash flow, which hit $13.3 billion in 2012, or its $48 billion gross cash balance at year end. If Google Inc (NASDAQ:GOOG) used all of its free cash flow for a dividend, then the payout would be $40 a share, good for a 4.6% yield.

Earlier, I noted key markers to look for. Free cash flow and current cash are two of them, along withcapital spending. A great industry example is Big Pharma, which includes major drug stocks such as Merck & Co., Inc. (NYSE:MRK), Pfizer Inc. (NYSE:PFE) and others.

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