10 Free Cash Flow Gushers for Dividends, Buybacks and More

Excess free cash flow can often be used to generate long-term value for companies. Here are 10 FCF stocks that could be poised for growth.

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Free cash flow (FCF) is one of the most important financial metrics you can study, especially if you're a buy-and-hold investor.

FCF is the cash remaining after a company has paid its expenses, interest on debt, taxes and long-term investments to grow its business. And if a company generates more cash than it needs to run its business, it can do a number of useful things with it, such as pay dividends, buy back its stock, acquire other companies, expand its business and knock out its debts.

There's no right answer as to the best way to use free cash flow. But the ability to consistently grow FCF over the long haul – however it's put to use – is a proven recipe for higher share prices.

We examined the top 10 holdings from three different exchange-traded funds (ETFs) focused on free cash flow: the Pacer US Cash Cows 100 ETF (COWZ (opens in new tab)), the AAM S&P 500 High Dividend Value ETF (SPDV (opens in new tab)), and the TrimTabs US Free Cash Flow Quality ETF (TTAC (opens in new tab)).

With that in mind, we selected a few stocks from each ETF, choosing companies that generate high amounts of FCF and put it to good use via dividends, buybacks and more. Read on to see our list of 10 free cash flow stocks that could be poised for long-term growth.

Data is as of May 21. Free cash flow yield is FCF divided by enterprise value (which is market cap plus debt minus cash).

Will Ashworth
Contributing Writer, Kiplinger.com

Will has written professionally for investment and finance publications in both the U.S. and Canada since 2004. A native of Toronto, Canada, his sole objective is to help people become better and more informed investors. Fascinated by how companies make money, he's a keen student of business history. Married and now living in Halifax, Nova Scotia, he's also got an interest in equity and debt crowdfunding.