Ideally the company you wish to buy both pays a dividend and puts money back into the business. How does someone determine which companies are investing back into the business? Charles Martin of Thomson Reuters examined companies using the Thomson Reuters data base. He focused on US large capital firms or market valuations greater than $10 billion. Next we went looking for growth rates in their free operating cash flow (FOCF) by 20% or more over the last 3 years and reinvested at least 10% annually of retained earnings. In addition Mr. Martin was looking for a return of at least 10% and dividends have grown by 10% a year over the last 5 years. There were top 16 are:

Company                        Ticker    Reinvestmt   FOCF 3Yr  Return on      Dividend              Dividend       52-week

0                                          N          Rate %          CAGR%     Invested Cap%   5YrCAGR       Yield %       % Change

Walt Disney                     DIS-N         13               23                12                    18                    1.3                14.3

Visa                                     V-N         16               22                 20                    26                   0.7                30.9

Nike                                  NKE-N       20              64                 23                     12                   1.0                 42.5

Boeing                                 BA-N       27              62                 30                     12                   2.7                   5.2

Qualcomm                       QCOM-Q     13             20                 20                     19                   3.5             -28.0

Honeywell                           HON-N     16            37                  16                      10                  2.1                  1.3

Lowe’s Companies             LOW-N     17            20                   13                     16                  1.6                28.7

TJX Companies                  TJX-N      41             25                  38                     19                  1.2                 20.7

Estee Lauder                        EL-N      20              31                 21                     26                  1.2                   4.1

Cardinal Health                  CAH-N      12              43                 10                     13                  1.9                   9.1

Southwest Airlines              LUV-N      14              39                 12                      61                 0.8                14.0

Aon PLC                              AON-N     15              24                 11                     11                  1.3                 4.0

Ross Stores                        ROST-Q    35              23                35                      25                  1.0                31.0

Magellan Midstream Part      MMP-N     15             86                17                     15                   4.7               -25.3

Rockwell Automation            ROK-N       19            23                21                     14                   2.5               -11.2

Gap                                        GPS-N       29            21               29                      10                  2.9               -26.8

Linking to dividend paying stocks, the chart shows a wide variety of companies and although the stock price ranges from going up to going down, the risk level is lower given the reinvestment and dividend paying. Picking stocks is still an art but lowering the risk and raising the return is what you should be looking for. Charts such as these allows you to start and equally important to eliminate companies to invest in, giving there are always many alternatives.

There are more questions than answers, till the next time – to raising questions.