3 Cash Cows to Milk for Massive Yields for Decades to Come (2024)

Inflation is cooling, but the Federal Reserve’s wait-and-see approach could postpone any swift interest rate cuts. Hence, it’s probably the perfect time to anchor your portfolio with resilient cash cow stocks.

Cash cow stocks boast underlying businesses that produce substantial, predictable, and recurring free cash flows. The free cash flow metric is far superior to earnings per share, showing the actual cash on hand. It effectively sidelines non-cash elements such as depreciation to offer a clearer liquidity picture. Additionally, these companies provide healthy dividends while harboring multiple growth catalysts.

That said, check out these three cash flow stocks to buy, offering healthy yields and promising upside potential. Using the GuruFocus Screener, I picked three cash cow stocks, each showcasing a free cash flow (FCF) margin between 10% to 20%, paired with a dividend yield ranging from 4% to 6%.

Kraft Heinz (KHC)

Consumer packaged goods giant Kraft Heinz (NASDAQ:KHC) is one of the most attractive stocks to pick up in its niche. At just 10.73 times forward earnings, it’s trading roughly 58% cheaper than its 5-year average of 25.47.

Yet, the powerhouse behind popular brands like Jell-O and Kraft cheese faces economic turbulence that continues to challenge its top-line growth. However, despite facing a dip in its first-quarter (Q1) volumes that couldn’t offset higher pricing, the firm has confidently reaffirmed its full-year outlook. As the economy begins to rebound, expect a major snapback in KHC stock while rewarding its investors with a consistent dividend that has been a staple for 11 straight years.

On a strategic front, the company is looking to offload its beloved Oscar Mayer hotdog and packaged meats brand for $5 billion. These efforts are in line with its plans to shift towards healthier alternatives. Additionally, CEO Carlos Abrams-Rivera alluded to potential expansion efforts in the gluten-free market in embracing the evolving food industry landscape.

Nutrien (NTR)

Nutrien (NYSE:NTR) is a powerhouse in the fertilizer space, capitalizing on the essential, evergreen demand for crop nutrients. The global population is growing, and the rise in food consumption continues to drive Nutrien’s top-line growth.

Recent results have been soft, but the firm has demonstrated resilience with higher retail earnings. Moreover, in Q1, it posted a 22.5% increase in North American crop nutrient sales volumes while posting a core profit of $77 million in Nutrien Ag Solutions, a significant recovery from last year’s loss.

Looking ahead, Nutrien remains bullish, maintaining its robust full-year EBITDA outlook. Moreover, it anticipates stronger sales volumes and margins in North America throughout the first half of 2024. Additionally, the firm foresees improved margins on crop inputs in Brazil later in the year.

Also, with $2 billion in free cash flow and a consistently growing dividend over the past five years, Nutrien positions itself as a lucrative bet in a vital industry.

Hasbro (HAS)

Hasbro (NASDAQ:HAS) stock has been ticking in the green, driven by the success of its turnaround efforts. Moreover, these efforts have sparked a wave of analyst upgrades, fueling its recent encouraging stock price action.

Bank of America analysts recently raised its price target for HAS stock from $70 to $80 per share, a32% increase from the price at the time of writing. Along with the bump in price target, the bank upgraded HAS stock from ‘neutral’ to ‘buy’ based on 11 analyst opinions. It touts gains from Hasbro’s digital gaming strategy, particularly with Monopoly Go. Additionally, its traditional gaming business continues to perform well, positioning Hasbro for superb growth next year.

Similarly, Bank of America securities analysts also upgraded the stock, driven by the success of its digital game Monopoly Go! and improvements in physical play. They raised its 2025 EPS forecast to $4.90 and increased its price target by double-digit margins to $80. Monopoly Go! is expected to contribute significantly to company profits, with robust projections of $36 million in operating profit per quarter in the second half. The outlook is positive, with strong momentum expected for 2025.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.