🚢 Steady FCF yields

After spending 11 days cruising recently through Scandinavia and the Baltics, one thing stood out beyond the stunning coastlines and crisp northern air. It was how remarkably steady the ship felt, even in open water.

It reminded me of something investors often chase - not the flashiest or fastest journey, but a journey that is smooth, enjoyable and ultimately gets you exactly where you want to go without unnecessary drama.

With that in mind, here's some recent analysis I've undertaken. I started with the 500 companies in the S&P 500. I then calculated their FCF yield (free cash flow divided by market capitalisation). I didn't just calculate the current FCF yield, I also calculated the FCF yield for every year over the last 10 years. I then determined how high and how low the yield had been over the time period and calculated the difference. The final value (presented in column 4 below) is a measure of how volatile the FCF yield is. The below is a list of companies that have delivered consistently strong free cash flow per share growth (column 2) with minimal valuation turbulence (column 3). I've highlighted in blue the companies I own in my portfolio.