Robust cash flows are a bedrock of financial stability, empowering companies to extinguish debt, pursue expansion opportunities, and disburse dividends with ease. They serve as a formidable shield against economic tribulations, waving the banner of a secure haven for investors.
For those seeking to invest in formidable cash generators, three companies stand out as stalwarts: Broadcom AVGO, Microsoft MSFT, and Visa V. Let’s embark on a closer exploration of each.
Broadcom
Broadcom, the eminent originator and purveyor of a diverse array of semiconductor devices, has exhibited a commendable dedication to enriching shareholders. The company boasts a significant 13.7% five-year annualized dividend growth rate, with AVGO shares presently yielding a robust 1.9% annually – notably superior to the Zacks Computer and Technology sector average of 0.7%.
The company’s formidable cash-generating abilities have buttressed its dividends, supported by a striking $16.3 billion in free cash flow during FY22, denoting a noteworthy 22% surge on a year-over-year basis.
Analysts are optimistic about the current fiscal year, with a $47.87 Zacks Consensus EPS Estimate marking an 11% increase over the preceding year and a 13% year-over-year growth.
Microsoft
Analysts have similarly expressed bullish sentiment about Microsoft’s fiscal year, with the $11.14 Zacks Consensus EPS Estimate up by 6% over the past year, reflecting a year-over-year growth of approximately 14%.
MSFT shares currently yield a respectable 0.8% annually, marginally surpassing the respective Zacks sector average. The tech titan has exemplified its commitment to shareholders, boasting a 10% five-year annualized dividend growth rate.
Akin to AVGO, Microsoft’s prowess in generating copious cash flow fortifies its dividend payments. The company churned out a substantial $59.5 billion in free cash flow during FY23, with the trailing twelve-month figure equally laudable at $63.3 billion.
Visa
Financial juggernaut Visa is famed for its capacity to generate copious cash flow, having amassed a staggering $17.9 billion in free cash flow throughout FY22 – a remarkable 23% surge from FY21. Over the last twelve months, the company has recorded an awe-inspiring $19.7 billion.
Visa has garnered favorable prospects for its current fiscal year, with the $9.89 Zacks Consensus EPS Estimate witnessing a 3.5% upsurge over the preceding year, signifying a 12.7% year-over-year growth.
An upcoming quarterly report slated for January 25 promises year-on-year EPS growth of 7%, with a consensus revenue estimate of $8.5 billion, marking a 7% increment from the previous year.
Bottom Line
Enterprising companies abounding in cash-generating prowess offer a tantalizing prospect for investment, fueling growth, facilitating debt payments, and placating shareholders’ yearnings for dividends. Indeed, possessing such potential in the face of economic upheaval is undeniably a boon.
For those scouting for cash-coursing dynamos, the trio of Broadcom AVGO, Microsoft MSFT, and Visa V ticks all the boxes of robust cash generators.