3 Companies Turning Big Cash Flow Into Bigger Shareholder Gains

Inflation, interest rates, and broader economic uncertainty have forced companies across many sectors to prioritize efficiency. In this environment, it can be particularly challenging for firms to maintain cash flow, which is vital to their continued healthy operations and growth. Strong free cash flow also positions companies more favorably to make smart capital returns to investors in the form of dividends or share buybacks.

Investors seeking Buy-rated companies that have managed to thrive in the area of cash flow and that are using this cash effectively to enhance value for shareholders might start by looking at three names in the healthcare and technology spaces below.

Impressive Healthcare Portfolio Contributes to Solid Dividend History

Biopharmaceuticals giant Gilead Sciences Inc. (NASDAQ: GILD) is known for its antiviral medications and those with applications in oncology and inflammatory diseases. The company has a history of strong cash generation—in the latest quarter, it reported free cash flow of nearly $4 billion and operating cash flow of $4.1 billion—thanks to its high-margin products and strong sales.

Gilead's portfolio of drugs is sizable and varied, including major medicines for the treatment of HIV, liver disease, and much more. The strength and breadth of this portfolio helps to ensure that Gilead sees healthy sales each quarter, which it can then feed back into further R&D and, notably for investors, an attractive dividend distribution.

The company has paid a 79-cent dividend in each of the last four quarters, after a 2-cent boost early in the year. This translates to a dividend yield of 2.65%, above the average for the healthcare sector. Gilead has been able to sustain dividend growth while maintaining a relatively low payout ratio of around 49%, suggesting that it should be able to maintain these capital returns going forward.

Shares of GILD are up close to 30% this year, and as an added bonus, analysts see another 9.5% in upside in the company's future.

Vital AI and Data Center Technology Yields Healthy Cash Flow

Applied Materials Inc. (NASDAQ: AMAT) plays an essential role in the semiconductor industry by providing technology vital to the fabrication of chips of many kinds. This has made the company increasingly indispensable as the AI and data center industries have boomed and has caused AMAT shares to be an analyst favorite for growing earnings.

When Applied Materials reported its fiscal 2025 fourth-quarter results in mid-November, it impressed on multiple fronts: record results included revenue of more than $28 billion for the year and gross margin of 48.8%, up 120 basis points year-over-year. The fiscal year also included strong free cash flow of $5.7 billion, despite headwinds to the company's business in China due to trade restrictions. Importantly for investors, Applied Materials returned more than $6 billion in capital via dividend distributions and buybacks.

The company has applied this cash toward dividend growth, achieving a five-year annualized dividend increase of close to 15%. Its dividend yield is 0.69%, but its payout ratio of 21.2% is especially impressive—this also appears to be a company with a healthy dividend that is sustainable over the long term.

Top- and Bottom-Line Growth Alongside Big Cash Flow

Another crucial player in the chip-making space, Qualcomm Inc. (NASDAQ: QCOM) has traditionally focused primarily on wireless communication technology, although it has more recently also expanded into AI and data center efforts, among others. With strong technical indicators in recent periods, QCOM shares may be reversing a downward trend from earlier in the fall.

Having also reported its fiscal 2025 fourth-quarter earnings results in November, Qualcomm noted full-year revenue and earnings per share (EPS) gains of 13% and 18%, respectively, thanks to a strong showing from its core QCT business.

Cash flow from operations for the latest quarter was an impressive $4 billion, and capital expenditure tends to remain low for the tech sector. This means that Qualcomm is freed up to deploy its cash reserves toward buybacks and, especially dividends. QCOM pays a dividend yield of 2.02%, having boosted its quarterly distribution by nearly 5% earlier in the year. With an additional 9% in possible upside anticipated across Wall Street, Qualcomm could be poised to deliver on both passive income and capital appreciation for investors.

Where Should You Invest $1,000 Right Now?

Before you make your next trade, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis.

Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.

They believe these five stocks are the five best companies for investors to buy now...

See The Five Stocks Here

The article "3 Companies Turning Big Cash Flow Into Bigger Shareholder Gains" first appeared on MarketBeat.