No. of Recommendations: 3
Ran across this being discussed in Kiplingers
Pacer US Cash Cows 100 ETF (symbol COWZ)
Zeros in on free cash flow, that is cash from operations left over after paying expenses, interest, taxes, and long term capital improvements. That money can be used to pay dividends, share buybacks, or acquire other companies. Companies with strong FCF can withstand economic volatility while also supporting long term growth and rewarding shareholders. The ETF starts by ranking the Russell 1000 index companies by "FCF yield" (FCF divided by market value), then weighting the stocks by FCF over the past 12 months. Each of the 100 holdings is capped at 2% of assets and re-balanced quarterly. Expense ratio is 0.49%
Well, there you have it. It sounds like a good investment thesis and intrgues me. So I have added it to my watch list with an eye toward maybe making a small (1% of portfolio) investment at some point. I know BruceCM is pretty savvy and he uses FCF as a major screen for his dividend portfolio but this utilizes that metric in a somewhat new application.
What do you all think?
