Company stewardship is the ability of company executives to efficiently allocate money to meet their business goals.
Also called: Capital allocation
What is company stewardship?
Companies with strong balance sheets, exceptional investments, and appropriate decisions around dividends have strong company stewardship. This means executives are making smart decisions with the company’s excess cash and help the company’s long-term financial position.
The Morningstar Capital Allocation Rating determines how well executives spend company resources. Balance sheets, investments, and dividends are factors that contribute to this rating. A company with a poor balance sheet often receives a "poor" Capital Allocation Rating. Companies that have fair balance sheets but make exceptional investments and distribute appropriate dividends receive an “exemplary” rating.