1 & 2. Fannie Mae & Freddie Mac
Fortune 500 rank: 13 (Fannie), 32 (Freddie)
2013 profits (millions): 83,963 (Fannie), 48,668 (Freddie)
It helps to have family in high places — especially when your uncle is named Sam. Since receiving a combined $187.5 billion from the Treasury Department during the financial crisis, mortgage giants Fannie Mae and Freddie Mac have bounced back so strongly that they repaid their taxpayer-funded loans — and then some — earlier this year.
Being propped up by the government also makes the mortgage-backed securities that Fannie and Freddie issue much more attractive to investors, who have largely abandoned similar assets issued by other mortgage financiers. But shareholders shouldn’t rejoice too much: 2013’s profits came largely from one-time legal settlements with banks over doomed pre-crisis securities. And when Uncle Sam bailed them out, he also took majority ownership of Fannie and Freddie, which requires them to pay all their profits back to the Treasury, leaving a lot of regular shareholders grumbling.
Fortune 500 rank: 5
2013 profits (millions): 37,037
Weaker sales of iPads pushed Apple’s full-year profit down 11%, but thanks to high margins and record iPhone sales — plus some creative tax maneuvering in Ireland — the company is still raking in mounds of cash. A drive from activist investors to share the wealth prompted Apple to initiate a quarterly dividend in 2012 that rose to $3.29 last May, as well as a 7-for-1 stock split set for June. The company has also set aside another $30 billion to buy back its stock through next year, raising that total expenditure to $90 billion. Other investors have called for Apple to use its money to make more strategic acquisitions, as other tech giants such as Google and Facebook have done.
4. Exxon Mobil
Fortune 500 rank: 2
2013 profits (millions): 32,580
Even with its worst profit since 2010, Exxon Mobil still landed among the top five moneymakers on the Fortune 500, coming in more than $10 billion ahead of the next-highest earner. The company produced less oil and gas than in previous years, but it also invested much more in exploration, especially in Russia. Together, those factors lowered Exxon Mobil’s annual profit by 27%, but the company plans to ramp up drilling, especially as it finds new oil and gas deposits, which should boost output and make it even more profitable in coming years.
Fortune 500 rank: 51
2013 profits (millions): 22,003
Pfizer’s sales have sagged in recent years as patents for its blockbuster drugs, such as Lipitor, have expired. But that didn’t stop the company from increasing its full-year profit by 51%, even as revenue declined 6%. Pfizer has worked to counteract patent losses by unloading its animal medications unit and has looked at splitting the company into multiple units to unlock more value. The drugmaker is also pushing to develop new treatments and has offered to buy rival drugmaker AstraZeneca for $100 billion, which would likely increase short-term costs but eventually add to profits tremendously.
6. Wells Fargo
Fortune 500 rank: 29
2013 profits (millions): 21,878
The San Francisco-based bank posted record profits of $21.9 billion on revenues of $83.8 billion, earning more than any other U.S. bank during the same period and marking Wells Fargo’s fifth consecutive year of record earnings. In the years since the financial crisis, the company has prospered by focusing on traditional types of banking, which included providing financing to 1.5 million consumers to buy homes or refinance existing mortgages in 2013.
Fortune 500 rank: 34
2013 profits (millions): 21,863
For Microsoft, the year was all about change. The company announced a massive reorganization last July, basing its personnel around function instead of products. Just one month later, longtime CEO Steve Ballmer announced he would step down, making way for Satya Nadella, who took the reigns in early 2014. Neither shake-up seemed to affect Microsoft’s momentum: Revenues climbed 6% driven by the company’s Server and Tools division, which develops products like Windows Azure. Sales from new products and services such as Windows 8 and Surface tablets also helped lift results.
Fortune 500 rank: 3
2013 profits (millions): 21,423
Headquartered in San Ramon, Calif., the nation’s second-largest oil company saw profits decline 18% and blamed the plunge on lower global crude oil prices and refining margins. Still, 2013 proved to be a prolific year: Chevron started production at the Angola liquefied natural gas plant in southern Africa and made progress with construction on two plants in western Australia. Looking ahead over the next four years, the company expects to pour over $15 billion into several ventures, including two deepwater projects in the Gulf of Mexico that are expected to come online by next year.
9. Berkshire Hathaway
Fortune 500 rank: 4
2013 profits (millions): 19,476
“America’s best days lie ahead,” Warren Buffett predicted in his annual letter to shareholders. Given his long track record, they have no reason to wonder otherwise. Last year alone, the multinational conglomerate, which owns roughly 80 wide-ranging subsidiaries, posted record profits, driven by rising revenues across all of its business segments, including Insurance and Utilities and Energy. Up next: more big investments likely, or what Buffett likes to call “elephants,” following acquisitions including ketchup maker H.J. Heinz Co., a $23.3 billon deal conducted with 3G Capital that closed last June.
Fortune 500 rank: 11
2013 profits (millions): 18,249
The second-largest wireless provider in the U.S. watched profits more than double last year, thanks to its growing wireless, wireline data, and managed IT services. Meanwhile, AT&T continued to pump billions into growing its 4G LTE network to cover 300 million people by the end of 2014, part of a larger plan dubbed Project VIP to expand its overall reach.
11. J.P. Morgan
Fortune 500 rank: 18
2013 profits (millions): 17,923
Legal woes took a big bite out of J.P. Morgan’s profits in 2013 — big enough for the bank to set aside $23 billion to cover its various legal snafus. Among the big payouts last year: $2.6 billion to settle Bernard Madoff-related lawsuits and $17.5 billion in fines and settlements related to risky mortgage securities. Without its various charges, J.P. Morgan’s earnings would have risen. CEO Jamie Dimon has repeatedly said he’s optimistic about the economy and that he expects interest rates to rise, but whether higher rates will help the bank make more money on its loans or continue to drag on sluggish lending remains to be seen.
12. International Business Machines
Fortune 500 rank: 23
2013 profits (millions): 16,483
Data, data, data — and cognitive computing. That’s all IBM CEO Ginni Rometty talked about in 2013. Big Blue’s income took a dip, but the company is looking to tap into the data and analytics market to spark growth. IBM also launched the Watson Group, a $1 billion investment in commercializing the technology used by its supercomputer, Watson. The company still has its work cut out for it: IBM has pledged earnings per share of $20 by 2015, but with shrinking revenue and operating income, many wonder how it can hit that lofty target.
13. Wal-Mart Stores
Fortune 500 rank: 1
2013 profits (millions): 16,022
Doug McMillon spent his first year as CEO steering Wal-Mart to continued financial success. Profits at the world’s biggest retailer dropped 5.7% due to sluggish sales, but they were still enough to keep it at No. 1 in the Fortune 500. To fight headwinds due to higher taxes and health care costs, the company has made aggressive moves into financial services. Money transfers and auto insurance partnerships recently joined check cashing and alternative banking for low-income customers — many of whom could also be Wal-Mart employees. The retailer still has to contend with repeated calls to raise wages as McMillon took home $25.6 million last year.
14. Johnson & Johnson
Fortune 500 rank: 39
2013 profits (millions): 13,831
Johnson & Johnson saw a 27.4% jump in profits, thanks to sales increases in its prescription drug and medical devices businesses. CEO Alex Gorsky is focused on continuing to keep net income high by cutting up to $1 billion in costs over the next three years through job cuts and the selling off some of the company’s slower businesses. Last March, J&J announced it’s selling its Ortho-Clinical Diagnostics business to The Carlyle Group for $4 billion.
Fortune 500 rank: 26
2013 profits (millions): 13,673
CEO Michael Corbat navigated Citi through a bumpy year caused by the Federal Reserve’s announcement that it would begin tapering its Quantative Easing program. The bank earned its greatest profits since the financial crisis, a feat won by lower operating expenses (down 13% from 2012) and growth in developed and emerging markets. But Citi faces its fair share of troubles going forward. A continuing scandal at the bank’s Mexican Banamex subsidiary continues to carve out its bottom line, while investor confidence took a big hit when Citigroup was the only major Wall Street firm to flunk the Fed’s latest stress tests.
16. General Electric
Fortune 500 rank: 9
2013 profits (millions): 13,057
Though the majority of GE’s businesses saw increasing profits in 2013, the company’s net income dropped 4.3% due to restructuring. CEO Jeff Immelt spent $2 billion on simplifying operations last year — which included the selling of GE’s 49% stake in NBCUniversal to Comcast for $16.7 billion (the cash was then used to buy back GE shares). The company hopes to see a payback by the end of 2014.
Fortune 500 rank: 46
2013 profits (millions): 12,920
Google does everything: email, self-driving cars, new-age glasses, phones and, oh yeah, search. Google-owned sites generated some 67% of the company’s revenue last year as advertisers continued to pay for exposure on its vast network and those omnipresent white search pages that make Google the most trafficked site on the Internet. The company’s Motorola business was a drag though, costing it $384 million in the fourth quarter alone. Google finally threw in the towel on its handset unit in January, selling it to Lenovo for $2.91 billion.
18. Verizon Communications
Fortune 500 rank: 16
2013 profits (millions): 11,497
Can you hear me now? For the 25% of U.S. residents who are Verizon customers, a better question might be, “Where do I sign?” Despite increased competition from T-Mobile’s simpler, no-contract model, Verizon is the phone company to beat, serving 103 million retail customers across the country. In 2013, Verizon’s operating income increased 20% over the prior year. That’s a pretty sweet rebound from a $1.93 billion loss in the fourth quarter of 2012 due to pension costs and expenses related to Hurricane Sandy.
19. Bank of America
Fortune 500 rank: 21
2013 profits (millions): 11,431
Since taking over in 2010, Bank of America CEO Brian Moynihan has cut costs, dealt with most of the firm’s mortgage-security woes, and turned losses into profits by focusing on core consumer and business banking units. It looks like BofA has finally put the worst of the financial crisis behind it, right? Not so much. Last April, Bank of America revealed that over the last five years, it may have hidden up to $4 billion in losses on debt inherited from Merrill Lynch. The bank says it was an honest accounting error, but that little mulligan was enough for regulators to put a hold on a $4 billion boost to BofA’s stock buyback plan.
20. Procter & Gamble
Fortune 500 rank: 31
2013 profits (millions): 11,312
Profits may have climbed 5% in fiscal 2013, but investors are still waiting for a significant turnaround to take hold at Procter & Gamble. Since returning as CEO a year ago, A.G. Lafley has looked for ways to cut costs and revive the competitive edge that made P&G the world’s leading consumer goods maker, but sales and profits have only shown mild bumps. The company is selling most of its pet food business to Mars, a small step toward unloading non-core businesses, and one that has industry watchers asking: What else could the maker of Tide and Pampers afford to lose?