ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Direct Indexing
    • Disruptive Technology
    • Energy Infrastructure
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Financial Literacy
    • Fixed Income
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Multifactor
    • Night Effect
    • Portfolio Strategies
    • Responsible Investing
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. ETF Education Channel
  2. Cash Flow Kings at Home With These ETFs
ETF Education Channel
Share

Cash Flow Kings at Home With These ETFs

Tom LydonMay 26, 2023
2023-05-26

It’s often said that cash is king. Investors can apply that notion in the world of equities by searching for companies with track records of generating ample amounts of free cash.

For those that don’t want to do that legwork, some exchange traded funds are homes to solid numbers of companies with robust cash flow credentials. That group includes the Invesco QQQ Trust (QQQ B+) and the Invesco NASDAQ 100 ETF (QQQM B).

Those ETFs famously allocate nearly half their rosters to tech stocks and another 17.51% to communication services names. In the large/mega-cap space addressed by QQQ and QQQM, plenty of equities hailing from those sectors sport impressive cash flow credentials. For investors, there’s value in embracing baskets of companies that prioritize cash flow.

“With a cash flow statement, investors will learn how much cash a company is producing from operations and how much is left over after it accounts for day-to-day expenses such as payrolls, inventories, rents, and taxes — a measure known as free cash flow,” noted Morningstar’s Sandy Ward. “That gives a more honest appraisal of how well a company is managing its operations. And how equipped it is to handle debt payments, reinvest in its businesses, expand opportunistically, and return capital to shareholders in the form of dividends and share buybacks.”

QQQ, QQQM Cash Flow Dynamos

Among the QQQ and QQQM member firms that impress on the cash flow front is semiconductor giant Broadcom (AVGO). That stock accounts for 2.11% of the ETFs’ portfolios. Morningstar has a fair estimate of $640 on Broadcom, but the research firm notes that could jump to $680 should the company complete its acquisition of VMWare.

Another member of the QQQ and QQQM rosters with stout cash flow-generating ability is biotech behemoth Gilead Sciences (GILD). Gilead is the third-largest healthcare holding in the two Invesco ETFs.

“Most of Gilead’s debt (to fund share repurchases in 2014-16 and large acquisitions such as Pharmasset in 2011 and Kite in 2017) is due beyond 2025, making the repayment schedule look manageable, particularly with annual cash flow from operations north of $9 billion,” notes Morningstar healthcare analyst Karen Andersen.

Railroad operator CSX (CSX), which is the third-largest industrial holding in QQQ and QQQM, has an impressive cash flow story of its own. Along with Broadcom and Gilead, CSX appears on Morningstar’s list of seven stocks with market caps of at least $50 billion that have the best cash flow prospects.

For more news, information, and analysis, visit the ETF Education Channel.


Content continues below advertisement

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X