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 – Broadcom AVGO, Microsoft MSFT, and Visa V – are all cash-generating machines. Let’s take a closer look at each.
Broadcom
Broadcom is a premier designer, developer, and global supplier of a broad range of semiconductor devices.
Broadcom has shown a notable commitment to increasingly rewarding shareholders, boasting a sizable 13.7% five-year annualized dividend growth rate. AVGO shares currently yield a solid 1.9% annually, nicely above the Zacks Computer and Technology sector average of 0.7%.
Image Source: Zacks Investment Research
The company’s payout has been protected by its impressive cash-generating abilities. AVGO generated roughly $16.3 billion in free cash flow throughout its FY22, improving 22% on a year-over-year basis.
Image Source: Zacks Investment Research
It’s worth noting that analysts have become bullish on its current fiscal year, with the $47.87 Zacks Consensus EPS Estimate up 11% over the last year and reflecting year-over-year growth of 13%.
Image Source: Zacks Investment Research
Microsoft
Analysts have also become bullish on Microsoft’s current fiscal year, with the $11.14 Zacks Consensus EPS Estimate up 6% over the last year and reflecting year-over-year growth of roughly 14%.
Image Source: Zacks Investment Research
MSFT shares presently yield a respectable 0.8% annually, modestly above the respective Zacks sector average. And the tech titan has shown a commitment to shareholders, carrying a 10% five-year annualized dividend growth rate.
Image Source: Zacks Investment Research
Like AVGO, Microsoft’s cash-generating abilities help secure the payout. The company generated a sizable $59.5 billion in free cash flow in FY23, with the trailing twelve-month figure totaling an equally impressive $63.3 billion.
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. And over the last twelve months, the company has generated an impressive $19.7 billion.
Image Source: Zacks Investment Research
Like those above, the company has enjoyed positive earnings estimate revisions for its current fiscal year, with the $9.89 Zacks Consensus EPS Estimate up 3.5% over the last year and suggesting 12.7% year-over-year growth.
Image Source: Zacks Investment Research
Keep an eye out for the company’s upcoming quarterly release expected on January 25th, as the $2.33 Zacks Consensus EPS Estimate suggests growth of 7% year-over-year. Our consensus revenue estimate sits at $8.5 billion, 7% higher than the year-ago figure.
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 – Broadcom AVGO, Microsoft MSFT, and Visa V – fit the criteria.
Just Released: Zacks Top 10 Stocks for 2024
Hurry – you can still get in early on our 10 top tickers for 2024. Hand-picked by Zacks Director of Research, Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2023, the Zacks Top 10 Stocks gained +974.1%, nearly TRIPLING the S&P 500’s +340.1%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2024. You can still be among the first to see these just-released stocks with enormous potential.
See New Top 10 Stocks >>Microsoft Corporation (MSFT) : Free Stock Analysis Report
Visa Inc. (V) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
