Best Free Cash Flow Yield Stocks For 2026: Current Ideas By Region, Backed By a 10-Year Test

Last updated: November 2026. By Tim du Toit.

These are the companies with the highest free cash flow yield in 4 regions (worldwide, North America, Europe and Asia), screened from 22,000+ companies on 4 November 2026.

Free cash flow yield is defined as free cash flow divided by enterprise value. In our point-in-time database, the top 20% of companies by free cash flow yield rose 93.5% from October 2016 to October 2026, against 60.4% for all companies.

Add 12-month price momentum and the top group rose 121.4%. The worst 12 months for the top 20% were October 2021 to October 2022: down 20.6%, while all companies fell 29.5%. The tables below are a snapshot. For current ideas, you run the same screen in the screener.

This article is general research for a broad audience. It is not personalised investment advice. The returns shown are back-tested averages of large groups of companies, not individual stock picks and not a forecast. Past performance does not guarantee future results, and you can lose money.

Key findings

• Our 10-year test (October 2016 to October 2026, all countries, point-in-time data): top 20% by free cash flow yield +93.5%, all companies +60.4%, bottom 20% +1.7% (share price only).
• Top 20% by free cash flow yield plus 12-month momentum: +121.4%, ahead of the all-company average in 7 of 10 years.
• USA, 1971 to 2010 (Gray and Vogel, Alpha Architect): the cheapest 20% by free cash flow to enterprise value returned 16.6% a year, second of 5 ratios after EBITDA/EV at 17.7%.
• USA, 1997 to 2025 (Verdad): the highest free cash flow yield quarter returned 15.8% in the next year, the lowest quarter 6.6%.
• Europe, 1999 to 2011 (our book): the cheapest 20% returned 248.7% against 30.5% for the market. With 12-month momentum: 755.0%.

Best free cash flow yield stocks for 2026, by region

Each region has 2 lists:

1. High free cash flow yield: sorted by FCF yield, highest first.
2. High free cash flow yield plus momentum: the top 20% by FCF yield, sorted by Price Index 12 months (share price today ÷ share price 12 months ago), highest first.

Screen rules for all regions: top 20% by free cash flow yield, market value at least USD 100 million, median daily traded value at least USD 100,000, and financial statements updated in the last 6 months.

I left out companies with a free cash flow yield above 50%. A yield that high means the company would pay back half its price in cash in one year, which almost always comes from a data error or a one-off event such as an asset sale. On 4 November 2026 this rule removed 53 of the 1,394 companies in the top 20%. The 10-year test below did not use this rule; it includes all companies.

Screen date: 4 November 2026. Time horizon: 12 months. These are ideas for your own research, not recommendations to buy. The editorial team holds none of the companies in these tables.

Worldwide: high free cash flow yield

All countries included.

Worldwide, high free cash flow yield Source: Quant Investing screener, data as on 4 November 2026. A snapshot, not a live ranking. General information only, not personalised investment advice.

Worldwide: free cash flow yield plus momentum

Worldwide, free cash flow yield plus momentum. Source: Quant Investing screener, data as on 4 November 2026. A snapshot, not a live ranking. General information only, not personalised investment advice.

North America: high free cash flow yield

USA and Canada.

North America, high free cash flow yield Source: Quant Investing screener, data as on 4 November 2026. A snapshot, not a live ranking. General information only, not personalised investment advice.

North America: free cash flow yield plus momentum

North America, free cash flow yield plus momentum Source: Quant Investing screener, data as on 4 November 2026. A snapshot, not a live ranking. General information only, not personalised investment advice.

Europe: high free cash flow yield

EU countries, Scandinavia and the UK.

Europe, high free cash flow yield Source: Quant Investing screener, data as on 4 November 2026. A snapshot, not a live ranking. General information only, not personalised investment advice.

Europe: free cash flow yield plus momentum

Europe, free cash flow yield plus momentum Source: Quant Investing screener, data as on 4 November 2026. A snapshot, not a live ranking. General information only, not personalised investment advice.

Asia: high free cash flow yield

Australia, China, Hong Kong, Japan, South Korea, New Zealand and Singapore.

Asia, high free cash flow yield Source: Quant Investing screener, data as on 4 November 2026. A snapshot, not a live ranking. General information only, not personalised investment advice.

Asia: free cash flow yield plus momentum

Asia, free cash flow yield plus momentum Source: Quant Investing screener, data as on 4 November 2026. A snapshot, not a live ranking. General information only, not personalised investment advice.

Get fresh free cash flow yield ideas on current data

These tables are a snapshot from 4 November 2026. Companies move in and out of the top 20% as prices and results change. With a subscription you run this screen on current data for 22,000+ companies, in the countries you choose, and see the companies that qualify now.

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Why high free cash flow yield stocks beat the market: the evidence

Free cash flow is the cash left after a company pays to run and maintain its business. It is the money a company can use to pay dividends, buy back shares or repay debt. Earnings depend on accounting choices. Cash is harder to change: the cash at the start of the year, plus or minus the cash the business made or lost, must equal the cash at the end of the year.

Andrew Lapthorne, head of quantitative equity research at Société Générale, put it this way in 2016: "Cash flow is fact, and net income is just an opinion. Free-cash-flow yield is by far the best value factor we measure globally."

One limit you should know. Most databases, our screener included, use the common definition: cash from operations minus capital expenditure. Michael Mauboussin (Counterpoint Global, Morgan Stanley, September 2026) also subtracts stock-based pay to employees. He found this cuts operating cash flow by about 10% to 20% for large technology companies. So for companies that pay staff mostly in shares, the free cash flow yield in any screener looks higher than it is. For a step-by-step calculation example, read FCF yield: how to calculate it and what a good yield is.

Our 10-year test: 2016 to 2026

Most published studies stop in 2011 or earlier. So I tested the same screen on our own point-in-time database. It has saved every screener value on every trading day since December 2015, so the test uses only the data an investor had on each date (no look-ahead bias).

• Dates: mid-October each year from 2016 to 2025. Hold for 12 months, then sort again.
• Companies: all countries, market value at least USD 100 million, median daily traded value at least USD 100,000, free cash flow yield not zero. About 8,000 to 11,000 companies a year.
• Groups: 5 equal groups by free cash flow yield, equal weight inside each group.
• Momentum version: the top 20% by free cash flow yield, then the 20% of those with the highest Price Index 12 months. About 310 to 440 companies a year.
• Return: change in share price in local currency. No dividends, no trading costs, no taxes.

Share price change in local currency, equal weighted, mid-October to mid-October. Source: Quant Investing point-in-time screener database, test run 22 October 2026.

The top 20% beat the all-company average in 9 of 10 years. The exception was October 2019 to October 2020. In those 12 months the companies with the most negative free cash flow rose 29.7%, and the top 20% rose only 1.8%. Expect years like that. They test whether you can stay with a strategy.

The second 20% (yields of about 4% to 7%) did slightly better than the top 20%: 103.3% against 93.5%. The very highest yields include data errors and companies with one-off cash. The momentum version had the highest return and the smallest worst year, but it was behind the plain screen in 5 of 10 years.

This test has limits. It measures share price only. High free cash flow companies often pay higher dividends, so the real gap may be bigger, but I did not measure it. Companies without a price at the end of a year (for example after a takeover or a delisting) are left out, which can make all groups look better. And I did not measure falls inside each year, so the largest fall from peak to low was bigger than the worst 12-month result.

USA, 1971 to 2010: second best of 5 valuation ratios

Wesley Gray and Jack Vogel of Alpha Architect tested 5 valuation ratios from 1 July 1971 to 31 December 2010 in "Analyzing Valuation Measures: A Performance Horse-Race over the past 40 Years". They left out financial companies, utilities and the smallest 10% of companies by market value. Every 30 June they sorted companies into 5 equal groups and rebalanced once a year.

Average annual return, equal weighted, 1 July 1971 to 31 December 2010. Source: Gray and Vogel, Analyzing Valuation Measures: A Performance Horse-Race over the past 40 Years.

Free cash flow/EV came second, 1.1% a year behind EBITDA/EV and 0.6% a year ahead of earnings/price. Using 2- to 8-year averages of each ratio did not improve returns. One weak point: the most expensive 20% by free cash flow/EV still made 11.0% a year, so its gap between cheap and expensive (5.5%) was smaller than for EBITDA/EV (9.7%).

USA, 1997 to 2025: high free cash flow yield, low growth, high returns

Verdad (Brian Chingono, "Investing for Growth", December 2025) sorted US stocks into 4 equal groups by trailing 12-month free cash flow yield each year from June 1997 to June 2025.

Average annual return. Returns for 2 to 4 years are yearly averages without rebalancing. Source: Verdad, Investing for Growth, December 2025.

The high free cash flow yield group grew operating profit (EBIT, earnings before interest and taxes) by only 1.6% a year over the next 3 years, against 4.7% for the low group. But the high group made 28.9% gross profit on its assets, against 14.9% for the low group. The companies that spent the most on capital expenditure grew faster, but their shares did slightly worse: 11.9% in the next year, against 12.8% for the lowest spenders.

Europe, 1999 to 2011: our own test

In our book Quantitative Value Investing in Europe: What Works for Achieving Alpha, we tested 168 strategies over 12 years, from June 1999 to June 2011. Free cash flow yield was cash flow from operations minus capital expenditure, divided by enterprise value.

Total return, 13 June 1999 to 13 June 2011, trailing 12-month free cash flow yield. Source: Quantitative Value Investing in Europe: What Works for Achieving Alpha.

The market returned 30.5% in total over the 12 years (2.25% a year, dividends included). The cheapest 20% returned 248.7%, and the result held for small, mid and large companies.

USA, 20 years: free cash flow on invested capital

Richard Tortoriello of Standard & Poor's backtested more than 1,200 strategies over 20 years ("Quantitative Strategies for Selecting Stocks", AAII Journal, May 2010). One of them was cash ROIC: free cash flow divided by invested capital (equity plus long-term debt). The 20% of companies with the highest cash ROIC beat the universe by 5.0% on average. The lowest 20% lagged it by 5.9%. Companies with a cash ROIC of 12% or more did better, and those at 4% or less did worse.

18 countries, 1970 to 1989, and the USA, 1968 to 1990

Michael Keppler ranked the stock market indices of 18 countries by price to cash flow every quarter from January 1970 to December 1989 (quoted in Tweedy, Browne, What Has Worked in Investing). The cheapest 25% of countries compounded at 19.17% a year in local currencies. The most expensive 25% made 4.37% a year, and the MSCI World Index made 12.45% a year.

Josef Lakonishok, Andrei Shleifer and Robert Vishny ("Contrarian Investment, Extrapolation, and Risk", 1994) sorted NYSE and AMEX companies from 1968 to 1990 into 10 groups by price to cash flow. Over 5-year holding periods, the cheapest 10% returned 20.1% a year and the most expensive 10% returned 9.1% a year.

A 2026 multifactor paper on SSRN gives the reason this keeps working: free cash flow yield checks whether cheapness "is backed by genuine cash, which is less susceptible to manipulation than earnings or book value" (citing Dechow, Ge and Schrand, 2010).

How to improve the returns: add momentum

In our European test, we took the top 20% by free cash flow yield and added a second ratio. The table shows the 12-year total return (June 1999 to June 2011) when you also pick the best 20% (Q1) or the worst 20% (Q5) by that second ratio.

Total return, 13 June 1999 to 13 June 2011. First filter: top 20% by trailing 12-month free cash flow yield. Source: Quantitative Value Investing in Europe: What Works for Achieving Alpha.

Free cash flow yield alone returned 248.7%. Adding Price Index 12 months raised this to 755.0%. The cheap companies with the worst momentum returned only 5.3% in 12 years. Cheap companies whose share prices keep falling are often cheap for a reason.

Our 10-year test shows the same pattern on newer data, but the gap is much smaller: 121.4% with momentum against 93.5% without. Earlier versions of this article used 6-month momentum. 12-month momentum did better in the European test (755.0% against 582.8%), so the screens in this article use 12 months.

Why the highest free cash flow yields can be traps

Systematic Investing ("Layers of Return", Substack, February 2026) ranked a global universe of about 8,000 stocks by free cash flow yield and bought the top 50, with 2% trading costs. The strategy did well before 2008 and badly after it. The top ranks were full of value traps: companies that look cheap and stay cheap, or fall further. The fix in that study was to add other value ratios, and then momentum. In practice:

• Skip yields that are too high to be true. Some companies in our screen show yields in the millions of %. These are data errors or one-off cash events. The tables in this article leave out yields above 50%.
• Check that the cash will repeat. A one-off asset sale, a tax refund or a big fall in inventory can lift free cash flow for one year.
• Use momentum as a second filter, as shown above.
• Check the Piotroski F-Score (a 0 to 9 score of financial strength). In our European test it was a strong second ratio (568.7%). In our 2016 to 2026 data it did not add return (see the next section).

Build your own version of this screen

The 2 screens in this article use only 2 ratios: FCF yield and Price Index 12 months. The screener has over 110 ratios and indicators for 22,000+ companies, so you can build and test your own version. Every ratio in the 14-ratio table above is a column you can add to the screen. These ratios help most with the value-trap problem:

Not every extra filter adds return. In our 2016 to 2026 test, keeping only companies with an F-Score of 7 or more inside the top 20% by free cash flow yield returned 87.0%. All of the top 20% returned 93.5%. Momentum was the only second filter that added return in the recent data. So use the quality checks to remove companies you would not want to own, then test your version before you use it.

You can test it yourself with the historical screener. Our database has saved every screener value on every trading day since December 2015, the same data I used for the 10-year test in this article. With the AI Screener you can ask Claude or ChatGPT to run the screen and the back test for you.

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Add any of the checks above, test your version on the historical screener, and save it. Every subscription includes over 110 ratios and indicators for 22,000+ companies, on current data.

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Free cash flow yield compared with other valuation ratios

FCF yield vs the P/E ratio

The P/E ratio compares the share price with accounting profit. It ignores debt and cash. FCF yield compares real cash with the price of the whole business, debt included. In the 40-year US study, free cash flow/EV returned 16.6% a year and earnings/price 16.0% a year, a gap of 0.6% a year.

FCF yield vs EBITDA/EV

EBITDA/EV (earnings before interest, taxes, depreciation and amortisation, divided by enterprise value) was the best ratio in the same study, at 17.7% a year. EBITDA ignores capital expenditure. For a business that needs factories, ships or pipelines, that spending is a real cost, and FCF yield subtracts it. Many investors use EBITDA/EV to rank companies and FCF yield to check that the cash is there.

FCF yield vs price to book

AllianceBernstein (May 2026) found that since the 2008 financial crisis, a low price to book has been a weaker sign of value, because more companies are asset-light, such as software and services companies. Free cash flow works for those companies too.

Why the largest US companies now fail a free cash flow yield screen

Five companies that build AI data centres (Amazon, Alphabet, Microsoft, Meta Platforms and Oracle) made about USD 170 billion of free cash flow in the 12 months to the first quarter of 2024, a 2.0% yield on their market value. By the second quarter of 2026 this had fallen to about USD 35 billion, a 0.3% yield (Mauboussin, Counterpoint Global, September 2026). Consensus estimates show the group's 12-month free cash flow at about minus USD 265 billion in the third quarter of 2027.

Horizon Kinetics (second-quarter 2026 commentary) estimated that the Magnificent 7 traded at about 150 times their run-rate free cash flow, and that their stock-based pay ran at about USD 108 billion a year. Goldman Sachs (August 2026) shows that this spending has pulled the free cash flow yield of the S&P 500 down compared with Europe's STOXX 600.

So a free cash flow yield screen today keeps you out of the largest US technology companies. In the past, heavy capital spending did not lead to higher share returns (see the Verdad study above). It may be different this time. A screen cannot know that. It only shows you where the cash is today.

How to run this screen yourself

The screen is already saved in the screener, so you only have to load it:

1. Log in and click the Screener funnel icon.
2. Click Load, then the Predefined screeners tab.
3. Click the Free Cash Flow Momentum Screen, then Confirm.
4. Under Countries, select the countries you want.
5. Enter the minimum daily trading volume and market value. The numbers are in thousands, so 100 means USD 100,000.
6. Click Apply to see your ideas.
7. To keep your changes, click the Screener funnel icon, then Save As.

How to use the ideas in your portfolio

The back-test returns come from groups of hundreds of companies, not from one stock. So:

• Hold at least 30 to 50 companies from different industries, so that no single company decides your result.
• Keep the size and trading-value limits above, or use higher ones. Small, thinly traded shares can be hard to sell.
• Set your sell rules before you buy, for example a trailing stop loss of 15% to 20%. Read the best trailing stop-loss settings.
• Review once a year. Sell the companies that no longer pass the screen and buy new ones.

Expect falls. Tobias Carlisle tested value portfolios on Fama-French data from 1951 to 2013, price to cash flow included. When the market fell more than 10%, the value portfolios usually fell faster and further than the market, then recovered earlier. In our own test the top 20% lost 20.6% from October 2021 to October 2022. You are of course free to decide for yourself how you handle this.

What to do next

Free cash flow yield is a simple way to buy real cash at a low price. It worked in the US, in Europe, across 18 countries and in our own data up to October 2026. It also had bad years: the top 20% lagged badly from October 2019 to October 2020 and lost 20.6% from October 2021 to October 2022.

Run the screen. Save it. Pick a basket of companies that fit your rules, and stay with the process for years, not months.

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As above: this is general research, not personalised advice. Your investment decisions are your own.

Frequently asked questions

What is free cash flow yield?

Free cash flow (cash from operations minus capital expenditure) divided by enterprise value (market value plus debt, preferred shares and minority interests, minus excess cash). From October 2016 to October 2026, the top 20% of companies by free cash flow yield in our database rose 93.5%, against 60.4% for all companies (share price only).

What is a good free cash flow yield?

On 22 October 2026, the top 20% of companies in our screen (market value at least USD 100 million) started at a free cash flow yield of 7.2%. The next 20% had yields of 3.9% to 7.2%. Yields above 50% are usually data errors or one-off cash, so the tables in this article leave them out.

Does free cash flow yield investing still work?

In our data, yes: the top 20% made 6.8% a year from 2016 to 2026, against 4.8% for all companies. But a 2026 study found that a simple top-50 ranking did badly after 2008 because of value traps. Use a second filter, such as momentum.

Is FCF yield better than the P/E ratio?

Slightly, in the long US study: 16.6% a year for free cash flow/EV against 16.0% for earnings/price (1971 to 2010). FCF yield also counts debt and cash, which the P/E ratio ignores.

Which ratios should I add to a free cash flow yield screen?

12-month momentum added return in both of our tests: 755.0% against 248.7% in Europe (1999 to 2011), and 121.4% against 93.5% worldwide (2016 to 2026). Quality checks such as the C-Score, the accrual ratio and the Altman Z-Score help you remove companies whose cash may not repeat. An F-Score filter did not add return in our 2016 to 2026 data.

How many stocks should I hold?

At least 30 to 50 from different industries. Every result in this article is the average of a large group of companies, not of a single stock.

Why do the largest technology companies have low free cash flow yields?

Spending on AI data centres. The free cash flow yield of Amazon, Alphabet, Microsoft, Meta Platforms and Oracle together fell from 2.0% in early 2024 to 0.3% in mid-2026 (Mauboussin, September 2026).

How often is this article updated?

The idea tables are updated each January, together with a new year in the 10-year test.

Sources

• Gray, W. and Vogel, J., Analyzing Valuation Measures: A Performance Horse-Race over the past 40 Years (Alpha Architect).
• Chingono, B., Investing for Growth, Verdad, December 2025.
• du Toit, T. and Vanstraceele, P., Quantitative Value Investing in Europe: What Works for Achieving Alpha.
• Tortoriello, R., Quantitative Strategies for Selecting Stocks, AAII Journal, May 2010.
• Tweedy, Browne, What Has Worked in Investing (Keppler study, 1970 to 1989).
• Lakonishok, J., Shleifer, A. and Vishny, R., Contrarian Investment, Extrapolation, and Risk, 1994.
• Carlisle, T., Performance of Value During Market Drawdowns (June 1951 to December 2013), Greenbackd, 2014.
• Lapthorne, A., Société Générale, quoted in MarketWatch, 26 October 2016.
• Mauboussin, M., To Free or Not to Free (Cash Flow), Counterpoint Global, Morgan Stanley, 17 September 2026.
• Horizon Kinetics, Q2 2026 Market Commentary, July 2026.
• Goldman Sachs Global Strategy Views, 3 August 2026.
• Systematic Investing, Layers of Return: Classic Ranking and Composites, February 2026.
• AllianceBernstein, Value Stocks: The Cash-Flow Case for a Continuing Comeback, 2026.
• Quant Investing point-in-time screener database, 10-year test run 22 October 2026.