In a new report, Goldman Sachs analyst David Kostin looks at the record amount of cash on S&P 500 balance sheets and the record amount of spending that companies will be doing in 2016. Kostin believes that companies will be putting their cash to work at unprecedented levels next year.

The Numbers

Goldman projects that S&P 500 companies will spend $2.2 trillion in 2016, up 5 percent from 2015 spending levels. The latest numbers show that S&P 500 can certainly afford to be big spenders right now, as they currently hold more than $1.5 trillion in cash (ex-Financials).

The S&P 500 cash/asset ratio now sits at over 11.0 percent, its all-time high.

Goldman predicts that 54 percent of 2016 S&P 500 spending will be growth-driven spending such as capex, R&D and M&A spending. The other 46 percent of 2016 spending will be capital return spending in the form of dividends and buybacks.

Capital Returns Will Continue To Outperform

According to Kostin, stocks of companies with aggressive cash return spending programs will continue to outperform…

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