Having strong cash flows is a sign of financial security, giving companies the ability to pay off debts, pursue expansion opportunities, and provide dividend payments. Such companies are also better positioned to withstand economic downturns, offering a significant advantage for investors in the long term.
For investors seeking stable cash flows, there are three companies – Broadcom AVGO, Microsoft MSFT, and Visa V – that stand out as prolific generators of cash. Let’s delve deeper into each of them.
Broadcom
Broadcom is a leading global supplier, designer, and developer of a wide array of semiconductor devices.
It is noteworthy that analysts have turned bullish on Broadcom’s current fiscal year, with the $47.87 Zacks Consensus EPS Estimate increasing by 11% over the last year, sporting a 13% year-over-year growth.
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The company has exhibited a robust commitment to rewarding shareholders, showcasing an impressive 13.7% five-year annualized dividend growth rate. AVGO shares currently yield a solid 1.9% annually, surpassing the Zacks Computer and Technology sector average of 0.7%.
Moreover, Broadcom’s substantial cash generation, with approximately $16.3 billion in free cash flow throughout its FY22 – a 22% increase year-over-year – has safeguarded its dividends, making it an attractive proposition for investors.
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Microsoft
Similar to Broadcom, analysts have also become bullish on Microsoft’s current fiscal year, with the $11.14 Zacks Consensus EPS Estimate increasing by 6% over the last year, indicating a robust 14% year-over-year growth.
MSFT shares currently offer a respectable annual yield of 0.8%, slightly above the corresponding Zacks sector average, and the tech giant has demonstrated a strong commitment to shareholders, boasting a 10% five-year annualized dividend growth rate.
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Microsoft’s formidable cash-generating capabilities, evident from the substantial $59.5 billion in free cash flow in FY23, and the trailing twelve-month figure of an equally impressive $63.3 billion, have solidified its dividend payouts.
Visa
Financial powerhouse Visa is renowned for its cash-generating prowess. The company recorded approximately $17.9 billion in free cash flow throughout its FY22, a 23% improvement from FY21. Over the last twelve months, the company has generated an impressive $19.7 billion.
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Equally to the above companies, Visa has experienced positive earnings estimate revisions for its ongoing fiscal year, with the $9.89 Zacks Consensus EPS Estimate rising by 3.5% over the last year, indicating a 12.7% year-over-year growth.
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Investors should keep an eye out for the company’s upcoming quarterly release expected on January 25th, with the $2.33 Zacks Consensus EPS Estimate suggesting a 7% year-over-year growth. The consensus revenue estimate stands at $8.5 billion, 7% higher than the figure from the previous year.
Bottom Line
Companies demonstrating robust cash-generating capabilities make excellent investment prospects, as they have the financial resources to drive expansion, distribute dividends, and efficiently tackle debt. As articulated above, these companies are well-prepared to navigate economic downturns, undoubtedly a positive factor for investors.
If you are in pursuit of cash-generating companies, all three aforementioned – Broadcom AVGO, Microsoft MSFT, and Visa V – are ideal candidates.
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Microsoft Corporation (MSFT) : Free Stock Analysis Report
Visa Inc. (V) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
