Merger mania a big score for investors

Companies are in a buying mood — and that's been great news for investors.

It's a bull market for merger-and-acquisition activity this year with dollars spent on U.S. deals jumping 53%  to a record $2.4 trillion says Dealogic. There have been nine mega-deals valued at $50 billion or more this year, and now there's a 10th: Dow Chemical (DOW) on Friday struck a $68.6 billion deal to combine with DuPont (DD).

It's easy to see why companies are eager to combine. Merging is increasingly seen as a way to boost growth, expand market share and put at least part of companies' huge cash piles to work, says Richard Peterson of S&P Capital IQ. So far this year, there have been 9,923 U.S. deals, making it the sixth-straight year of 9,000 or more, Dealogic says.

Mergers, too, have been an antidote to the market's languishing performance this year for investors looking for a pop. It's been a pretty flat stock market this year — with the Standard & Poor's 500 down just about 1% — unless companies you owned were bought out. The top-performing stocks in each of the past four months have all been companies that were bought out.

Airgas (ARG), a distributor of industrial gases, soared 43.7% in November, making it the top-performing stock that month. The company was bought by France's Air Liquide for $13.4 billion. Computer storage company SanDisk (SNDK) soared 41.7% in October, the month it was bought by Western Digital (WDC) for $19 billion. Before that Cablevision (CVC) jumped 29% in September and Cameron International (CAM) added 32% in August — both following buyout offers.

Given companies are throwing so much money at mergers — and the solid gains to be had to owning the companies being bought — it's only natural that investors try to take advantage. So far, health care has been the sector with the most spent on U.S. deals this year, says S&P Capital IQ, at $613 billion. Financials are No. 2 at $426 billion.

But investors over the long term can take advantage of merger mania — by simply remaining invested. The ways things are going, eventually one of your companies will be snapped up.

HUGE YEAR FOR U.S. MERGERS

Announcement date, Deal value $ (bils.), No. of deals

2015, $2,379  9,923

2014, $1,551, 10,731

2013, $1,119.6, 10,124

2012, $975, 12,321

2011, $998, 10,561

Source: Dealogic