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 downturns, providing another beneficial advantage for investors from a long-term standpoint.
And for those seeking cash-generating machines, three companies – Apple $AAPL AAPL and Verizon $VZ VZ – fit the criteria nicely. Let’s take a closer look at how each currently stacks up.
Apple Remains Cash King
Apple has long been a cash-generating machine, providing many benefits over the years, including higher dividend payouts. In fact, Apple has raised its quarterly payout for nearly 15 consecutive years, now more than halfway to becoming a Dividend Aristocrat.
Shares yield a modest 0.4% annually, though the company’s 4.8% five-year annualized dividend growth rate helps bridge the gap. The tech titan has generated $129.1 billion in free cash flow throughout the trailing twelve-month period, with the trend remaining on a steady uptrend over the years.
Image Source: Zacks Investment Research
Verizon Keeps Generating Cash
Verizon’s strong cash-generating abilities have positioned it at the top of many income-focused investors’ lists, with the company similarly close to joining the elite Dividend Aristocrats club thanks to years of consistently higher payouts.
Below is a chart illustrating the company’s dividends paid per share on an annual basis. The company has generated $20.3 billion in free cash flow over the trailing twelve-month period. Shares currently yield a steep 6.0% annually, crushing that of the S&P 500.
Image Source: Zacks Investment Research
Bottom Line
Companies with strong cash-generating abilities are great targets, 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, both stocks above –Verizon VZ and Apple AAPL – fit the criteria nicely.
Beyond Nvidia: AI's Second Wave Is Here
The AI revolution has already minted millionaires. But the stocks everyone knows about aren't likely to keep delivering the biggest profits. AI’s second wave is moving from infrastructure to implementation and these companies are at the forefront of this transition, positioned to become what Amazon $AMZN and Google $GOOGL were to the internet era.
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Apple Inc. (AAPL): Free Stock Analysis Report
Verizon Communications Inc. (VZ): Free Stock Analysis Report