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Strong cash flows reflect financial stability, allowing companies to pay down debt, pursue growth opportunities, and shell out dividend payments. These companies are also better equipped to weather an economic downturn, providing another beneficial advantage for investors from a long-term standpoint.
And for those interested in investing in strong cash flows, three companies – Alphabet (GOOGL - Free Report) , Visa (V - Free Report) , and UnitedHealth (UNH - Free Report) – are all cash-generating machines. Let’s take a closer look at each.
UnitedHealth
Healthcare titan UNH generated roughly $23.4 billion in free cash flow throughout its FY22, improving 17% year-over-year. And over the last twelve months, UNH has generated nearly $40 billion in free cash flow, owing to its successful operations.
Image Source: Zacks Investment Research
The company also boasts a shareholder-friendly nature, with its dividend payout growing by an impressive 16% annually over the last five years. Shares presently yield 1.4% annually paired with a payout ratio sitting at 32% of its earnings.
Image Source: Zacks Investment Research
Keep an eye out for the company’s upcoming quarterly release on October 13th, as the Zacks Consensus EPS Estimate of $6.33 suggests a 9% improvement from the year-ago quarter. UNH posted balanced growth in its latest release, with both segments posting double-digit percentage year-over-year growth rates.
Alphabet
Alphabet shares have helped lead the market’s rebound in 2023, up more than 50% and widely outperforming the S&P 500. The tech titan has long been recognized as a cash generator, reporting roughly $60 billion in free cash flow throughout FY22.
Image Source: Zacks Investment Research
It’s worth noting that the company has seen positive earnings estimate revisions across all timeframes, reflecting optimism among analysts. The revisions trend has been particularly notable for its current fiscal year, with the $5.68 Zacks Consensus EPS Estimate up 9% since October of last year.
Image Source: Zacks Investment Research
The tech titan will reveal its next quarterly release on October 24th; the Zacks Consensus EPS Estimate of $1.45 has been revised modestly higher over the near term, suggesting a 35% growth rate from the year-ago period.
Visa
Financial titan Visa is also well-known for its cash-generating abilities, with the company recording roughly $17.9 billion in free cash flow throughout its FY22, improving 23% from FY21.
Image Source: Zacks Investment Research
Like UNH, Visa has an established track record of increasingly rewarding shareholders, boasting a 14.4% five-year annualized dividend growth rate. Shares presently yield 0.8% annually paired with a payout ratio sitting at 22% of its earnings.
Image Source: Zacks Investment Research
It’s also worth noting that Visa shares have recently bounced off the 200-day moving average, with buyers stepping up to defend. As we can see, the level has acted as support previously, providing solid upside in its latest instance.
Image Source: Zacks Investment Research
Bottom Line
Companies boasting strong cash-generating abilities can be great investments, as they have plenty of cash to fuel growth, pay out dividends, and easily wipe out debt. And as mentioned above, these companies are better equipped to handle an economic downturn, undeniably a positive.
Image: Shutterstock
3 Companies to Buy for Robust Cash Flows
Strong cash flows reflect financial stability, allowing companies to pay down debt, pursue growth opportunities, and shell out dividend payments. These companies are also better equipped to weather an economic downturn, providing another beneficial advantage for investors from a long-term standpoint.
And for those interested in investing in strong cash flows, three companies – Alphabet (GOOGL - Free Report) , Visa (V - Free Report) , and UnitedHealth (UNH - Free Report) – are all cash-generating machines. Let’s take a closer look at each.
UnitedHealth
Healthcare titan UNH generated roughly $23.4 billion in free cash flow throughout its FY22, improving 17% year-over-year. And over the last twelve months, UNH has generated nearly $40 billion in free cash flow, owing to its successful operations.
Image Source: Zacks Investment Research
The company also boasts a shareholder-friendly nature, with its dividend payout growing by an impressive 16% annually over the last five years. Shares presently yield 1.4% annually paired with a payout ratio sitting at 32% of its earnings.
Image Source: Zacks Investment Research
Keep an eye out for the company’s upcoming quarterly release on October 13th, as the Zacks Consensus EPS Estimate of $6.33 suggests a 9% improvement from the year-ago quarter. UNH posted balanced growth in its latest release, with both segments posting double-digit percentage year-over-year growth rates.
Alphabet
Alphabet shares have helped lead the market’s rebound in 2023, up more than 50% and widely outperforming the S&P 500. The tech titan has long been recognized as a cash generator, reporting roughly $60 billion in free cash flow throughout FY22.
Image Source: Zacks Investment Research
It’s worth noting that the company has seen positive earnings estimate revisions across all timeframes, reflecting optimism among analysts. The revisions trend has been particularly notable for its current fiscal year, with the $5.68 Zacks Consensus EPS Estimate up 9% since October of last year.
Image Source: Zacks Investment Research
The tech titan will reveal its next quarterly release on October 24th; the Zacks Consensus EPS Estimate of $1.45 has been revised modestly higher over the near term, suggesting a 35% growth rate from the year-ago period.
Visa
Financial titan Visa is also well-known for its cash-generating abilities, with the company recording roughly $17.9 billion in free cash flow throughout its FY22, improving 23% from FY21.
Image Source: Zacks Investment Research
Like UNH, Visa has an established track record of increasingly rewarding shareholders, boasting a 14.4% five-year annualized dividend growth rate. Shares presently yield 0.8% annually paired with a payout ratio sitting at 22% of its earnings.
Image Source: Zacks Investment Research
It’s also worth noting that Visa shares have recently bounced off the 200-day moving average, with buyers stepping up to defend. As we can see, the level has acted as support previously, providing solid upside in its latest instance.
Image Source: Zacks Investment Research
Bottom Line
Companies boasting strong cash-generating abilities can be great investments, as they have plenty of cash to fuel growth, pay out dividends, and easily wipe out debt. And as mentioned above, these companies are better equipped to handle an economic downturn, undeniably a positive.
For those seeking cash-generators, all three above – Visa (V - Free Report) , Alphabet (GOOGL - Free Report) , and UnitedHealth (UNH - Free Report) – fit the criteria.