Free cash flow -- or owner earnings, as it is referred to by the legendary investor Warren Buffett -- represents the cash available to shareholders after all other claims have been met. Based on FCF, a good measure of the fundamental strength of a company is its FCF yield, which is calculated by dividing a company's FCF per share by its current market price per share. A positive FCF yield means the company earns more cash than is needed for operations, which then can be used to fund growth, innovate, decrease debt, pay and grow dividends, or fund share buybacks.
While past performance may not necessarily replicate in the future, a few growth stocks with dividend yields exceeding 2% currently appear undervalued by their FCF. Here is a closer look at three dividend stocks with FCF yields at or above 6.7% and showing sign of future growth: Owens & Minor (OMI), Marvell Technology Group (MRVL) and Quest Diagnostics (DGX).
Source: Daily Finance
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