Updated 08/30/2021 with fresh data. Scroll down the page to find the current list of debt-free S&P 500 companies.
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How much long-term debt is on the balance sheet?
That’s one of the first questions I like to answer when I’m evaluating a stock. Companies borrow money for a myriad of reasons, including to launch business lines, fund acquisitions, fund operations, and sometimes to fund distributions to shareholders.
Smart MBAs sit in office suites and perform elaborate spreadsheet wizardry to try and determine what is the optimal level of debt to maximize profits. It’s complicated. I took a corporate finance class in college and hated it.
But I can still look at a balance sheet and determine if I’m comfortable with the amount of debt held or not. Sometimes companies get too aggressive and think they can borrow lots to make more money. But business and market conditions can change.
Borrowing can get out of hand. When there isn’t enough money to cover the debt payments, that’s when bankruptcies occur.
But nobody ever went bankrupt while debt-free.
Table of Contents
An Updated Resource for Risk-Averse Investors
Debt-free companies are some of the safest for investors because there are no debt payments hindering cash flow, and the risk of going under due to debt default is zero.
However, the perception to some is that if a company doesn’t borrow money, it’s not taking enough risk to spur growth and is, therefore, falling behind competitors, especially with today’s low rates.
If your investment risk tolerance is low, this list may be an attractive starting point for further investment research.
There’s a lack of resources to quickly identify these companies with consistent updates.
The list of companies has been shrinking. Many that were debt-free have fallen to the temptation of low-rate money. This could be a good thing.
Apple (AAPL) and Microsoft (MSFT) are two high-profile companies that were debt-free for a very long time but are no longer. Perhaps we should applaud companies for taking advantage of low rates to grow their businesses.
But not taking advantage of low rates doesn’t mean the company is bad. Conservative, maybe. Or maybe they just have all the capital they need to grow.
Due to investor demand for a current and updated list of debt-free S&P 500 companies, I’ve compiled this list and plan to update it quarterly.
Of course, this list doesn’t tell the whole story. Some companies have low amounts of debt and more cash on hand to cover the liability if needed. Those companies may also be worthy of consideration, but I’m only covering completely debt-free companies in the S&P 500 index on this page.
Before looking at the list, I’ll explain how I identified these stocks.
Screening Criteria for the Debt-Free S&P 500 Companies 2021 List
Note: This list is only as good as the data behind it. There is no guarantee of accuracy in the table below.
Companies are borrowing more and more these days because debt is so cheap. The list has atrophied over the past few years.
To identify the list of debt-free S&P 500 stocks, I start with the complete list of 500 companies compiled by Standards & Poors.
After testing various screeners and tools, I’ve settled on the FinViz stock screener using LT Debt/Equity <0.1, Debt/Equity <0.1, and index = S&P 500.
I then cross-check the list against the screener on Guru-Focus where cash-to-debt = no debt. Stocks on both lists make the cut.
Company balance sheets change every quarter. Due to data variations and annual/quarter reporting, the list may not always be precise at a given moment.
Keep in mind, this list is not a recommendation to buy or sell these stocks. For investors that value conservative management or a debt-free lifestyle, this may be a starting point to add positions to your portfolio.
As always, conduct further research before buying or selling any stock mentioned in this article.
If you see any discrepancies in this list or or have suggestions for a more comprehensive screener, please contact me or add a note in the comments section.
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You can attempt to buy each debt-free S&P 500 company one at a time at your primary brokerage. I prefer a more efficient method.
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When you add new funds to your account, the funds are automatically allocated to your investment plan, starting with the most undervalued stocks at the time of investment. You can choose all the debt-free stocks and make them one piece of a diversified portfolio.
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List of Debt-Free S&P 500 Companies 2021
All numbers are current as of date at the top of the table.
| Updated: | 01/26/2022 | |||||
|---|---|---|---|---|---|---|
| # | SYMBOL | COMPANY NAME | MKT CAP | P/E | DIV/SHR | YIELD |
| 1 | ABMD | Abiomed | 14.43B | 91.287 | - | - |
| 3 | ISRG | Intuitive Surgical | 102.41B | 57.04 | - | - |
| 4 | MNST | Monster Beverage | 46.08B | 30.24 | - | - |
Conclusion
This post isn’t meant to spur debate over whether it’s smart for a company to borrow or not. Each company has different business models and capital needs to operate.
My college corporate finance grade was one I want to forget. But I still have a personal preference towards companies with relatively low debt levels, although not all of my holdings fit that description.
I’ve owned heavily indebted companies and watched the value of the stock price plummet. I’ve also owned heavily indebted companies that pay me dividends year after year without issue.
Some investors may value a completely debt-free company over a debt-laden stock as a matter of investment safety or even personal or religious values. Use this list of debt-free S&P 500 companies 2021 however you like.
Disclosure: The author is long AAPL, MSFT, THO, FB, CMG, TROW
Featured photo credit: iStock.com/marekuliasz used under license as of 09/20/16
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Peter Weishaupt says
Excluding Facebook, Paypal and Ulta – the 13.98 is still nearly a double from the S&P…
Ali says
Thanks. Im hesitant to invest in companies that are in debt and owe interest payments which is against my religious beliefs. These routine update really helps. 🙂
Retire Before Dad says
Glad the list can help. If you see any discrepancies, please let me know. I do my best to keep it accurate every quarter.
Cavoszia says
I want to join this community!
Youssef Sherif says
It is because he is a Muslim like me. We should invest debt-free only
rouag says
hi
l’ve tried the screener td amertrade to finding free debt company of all usa not only sp 500 and l found 1738 company,
are they really all free long and short term debt companies.?
how can l confirm it in consolidated statement of income and balance sheet?
bacause in the consolidated statement despite l find 0 interest expense sometime l find interest income it means that that stock has debt?
sorry for all the questions their are to many but l didn’t manage to find answers l hope you will help me
Retire Before Dad says
Hi… I used the “Debt to Capital (MRQ)” field in TD Ameritrade and make sure it equals 0.00%. Then I take that list and cross reference it against the Key Statistics on Yahoo Finance.
Athan says
Thanks for your list. I also use it to invest for religious reasons, and bought PYPL last year, but I see you’ve removed it.
Is PYPL no longer a debt-free company? Or will you be adding them back to your list?
I can’t tell by just looking at the balance sheet, and I don’t have the TD screener. Thanks!
Retire Before Dad says
Thanks for the feedback. I’m glad you’re finding this information to be useful.
Another place to look to get a simple answer is the Yahoo Finance Key Statistics for each stock. As os 02/11/2019, it looks like PYPL has $2 billion of debt on the books.
https://finance.yahoo.com/quote/PYPL/key-statistics?p=PYPL
That is why it was removed. I try to flag these in the TDA screener but also verify on the Yahoo Finance page.
Adil Chouqui says
If you invested on religiouse purposes, you shouldn’t invest in PYPL, it’s not just a payment or money transfer company, they’re a credit card company as well, and usury is involved in their business model.
Kevin hannaway says
Thank you for publishing this article. It’s shocking to me that only 21 companies in the S&P 500 are debt-free. I can never understand why people invest in ETFs given the fact such a high percentage of companies in many indices (ETFs) are crap (high debt, poor management, no growth). It’s like buying a cord of firewood knowing that 40 to 50% of the wood is crap and will not burn. Investors today are much like our millenials; need immediate gratification and unwilling to do the work (research)
Murtaza says
Hello,
This is an awesome resource and I have been using it quite often. I was going through TTWO Q3 2019 filings and it shows it has interest expenses, I also cross checked with yahoo finance and found that they have a 1 million interest charge. Can you please explain this?
Christopher Scibelli says
I don’t know how much time you have on your hands, but maybe you can create another list. Companies with dividends above the median in the S&P 500 and less than 25% debt to equity. 25% D to E is not unreasonable. In the end anybody investing in stocks should be able to analyze a stock on their own. If not able to do so they belong in Mutual Funds.
I am an accounting major but have read enough finance books to have earned a degree in Finance. Most people start analyzing a company by looking at the income statement. I always start at the balance sheet because the balance sheet is like the foundation of a house.
Many companies have borrowed money to buy in stock during the low interest rates of the past decade. Stock buybacks should not be automatic and should only be made when the price is below the intrinsic value. We are living in crazy times. Not just referring to the virus but the low interest rates and the practices of some CEOs who should know better.
Retire Before Dad says
I’ve been thinking about adding some debt metrics to my Dividend Aristocrats page. You can accomplish this with a simple screen at your brokerage account, or using the Finviz link I use above. I would only produce such a table if there was widespread demand for such as screen. I have too many other ideas on my plate right now.
Christopher Scibelli says
I can do it on my own. I asked for others. You are doing a great job. Be interesting to see what other ideas you have.
Retire Before Dad says
If you send me a sample spreadsheet of your view, I’ll take a look.
J Salah says
I believe that means company is getting interest from non-operational services like keeping cash in Saving account, etc.
Khalid says
do you an easy way to screen for debt free companaies
Retire Before Dad says
It’s not easy, but I think I explained it above. Reread to find my filters.