Buy these high-quality dividend stocks with plenty of free cash flow, Bank of America says
The firm identified quality stocks it rates a buy, and some of the names have attractive dividend yields.
TL;DR
- Bank of America advises investors to prioritize quality stocks with high free cash flow in the current market.
- Free cash flow yield has been the best-performing factor over the last 30 years due to its difficulty to manipulate and comparability across companies.
- Current free-cash-flow yields on the S&P 500 are at record lows because tech companies are spending heavily on AI.
- Bank of America has identified Allstate, Cigna, and Hasbro as quality, non-AI companies with high free cash flow that it rates a buy.
- Allstate offers the highest free-cash-flow yield among dividend payers at 18% and has shown strong year-to-date performance.
- Cigna is favored by Wall Street with an 'overweight' rating and has raised its full-year guidance.
- Hasbro's growth is being driven by its 'Magic: The Gathering' game, and the company has beaten earnings expectations.
- These recommended stocks also offer solid dividend yields for investors seeking income.