Overview
Wolfe Research has assembled a thematic grouping of companies that marry notable dividend growth over the last twelve months with above-average unlevered free cash flow yields. The idea behind the basket is to surface stocks that not only raise payouts to shareholders but also generate the cash necessary to support those distributions. The firms in the list cover multiple sectors, including communications services, consumer discretionary and energy, offering varied exposures for income-oriented investors seeking growth in payouts.
Key constituents and recent company developments
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Nexstar Broadcasting Group (NASDAQ: NXST) - Positioned at the top of Wolfe Research's selection, Nexstar stands out for the combination of rapid dividend increases and strong cash generation metrics. The broadcaster reported fourth-quarter revenue of $1.29 billion and earnings per share of $5.63, both of which beat analyst estimates. Following those results, Guggenheim and Benchmark raised their price targets on the stock, with Benchmark specifically citing increased confidence in the company's acquisition of TEGNA.
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Comcast Corp. (NASDAQ: CMCSA) - Listed second by Wolfe Research, Comcast has a market capitalization of $113.5 billion and trades at 8.6 times earnings. The company posts a 9% unlevered free cash flow yield and a 4.2% dividend yield, with 36% dividend growth on the last-twelve-months measure alongside a 6% year-over-year performance decline. Comcast reported fourth-quarter earnings per share of $0.84, which exceeded analysts' expectations, though revenue was slightly below forecasts. The company also completed a trial using quantum computing algorithms aimed at improving network routing.
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Twenty-First Century Fox, Inc. (NASDAQ: FOXA) - Ranked third, FOXA carries a $22.9 billion market capitalization and trades at 12.1 times earnings. It offers a 7% unlevered free cash flow yield and a 1.0% dividend yield, with 12% dividend growth and 4% year-over-year gains. The company received an upgrade to Buy from Seaport Global Securities, and Guggenheim and BofA Securities also lifted their price targets. In addition, Fox News Media announced six executive promotions within its editorial leadership teams.
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Booking Holdings (NASDAQ: BKNG) - Booking ranks fourth with a $133.5 billion market capitalization and trades at 15.4 times earnings. The company produces an 8% unlevered free cash flow yield and a 0.9% dividend yield, while recording 14% dividend growth despite a 17% year-over-year decline. Booking reported fourth-quarter revenue and EBITDA that beat expectations. After the results, Morgan Stanley upgraded the stock, while other firms lowered price targets citing valuation and uncertainty related to AI.
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BorgWarner Inc. (NYSE: BWA) - In fifth place, BorgWarner has a $12.9 billion market capitalization and trades at 12.1 times earnings. The company delivers a 7% unlevered free cash flow yield and a 1.1% dividend yield, with 13% dividend growth and an outsized 110% year-over-year performance. BorgWarner reported fourth-quarter earnings and revenue that surpassed Wall Street expectations, and Deutsche Bank upgraded its rating while noting the company's strategic movement into the AI data center market.
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The Gap, Inc. (NYSE: GPS) - Ranked sixth, The Gap has a $10.3 billion market capitalization and trades at 11.9 times earnings. The retailer offers a 6% unlevered free cash flow yield and a 2.4% dividend yield. The company announced a 6% increase to its quarterly dividend and received a stock rating upgrade to Outperform from Baird. Moody's also revised The Gap's outlook to positive, citing improved operating performance.
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Primo Brands Corp. (NYSE: PRMB) - Listed seventh with a $6.7 billion market cap, Primo Brands reported fourth-quarter results that beat expectations, driven by a notable increase in premium brand sales and higher adjusted EBITDA. After the release, Jefferies raised its price target on the stock.
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Albertsons Companies, Inc. (NYSE: ACI) - Albertsons appears in eighth position with a $9.5 billion market capitalization. The company issued $2.1 billion in new senior notes to refinance existing debt and appointed Brian Rice, formerly McDonald's CIO, to its board of directors. Albertsons also named a new Chief Human Resources Officer.
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Plains All American Pipeline, L.P. (NASDAQ: PAA) - Ninth on the list, Plains All American has a $14.4 billion market capitalization. The company reported fourth-quarter earnings and revenue that missed analyst projections. Despite the mixed quarterly results, Goldman Sachs and Scotiabank raised their price targets on the stock.
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Viper Energy Partners LP (NASDAQ: VNOM) - Rounding out Wolfe Research's basket, Viper reported mixed fourth-quarter results, with both revenue and earnings per share coming in slightly below analyst forecasts.
Context and thematic focus
The basket emphasizes companies that have increased dividends over the last twelve months while also exhibiting elevated unlevered free cash flow yields. The selection spans multiple sectors, reflecting that dividend growth supported by cash generation is not limited to a single industry. Communications services, consumer discretionary and energy names are all represented among the ten holdings Wolfe Research highlighted.
Implications for investors
By combining growth in dividend payments with strong free cash flow yields, the group is positioned to appeal to income-focused investors who are also seeking companies that may sustain payouts through internal cash generation. The companies in the list have shown a mix of earnings beats, analyst upgrades, corporate financing actions and leadership changes, all of which figure into how each firm’s capacity to return cash to shareholders is assessed.