Free Cash Flow Yield Plus Growth. Cash flow can produce an immediate improvement in lifestyle and a financial safety net from day one, whereas seeking capital growth may mean you need to fund your assets for a period of time before enjoying the fruits of your labour.”. This ratio expresses the percentage of money left over for shareholders compared to the price of the stock.
Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the s&p 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation). Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the s&p 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation). Free cash flow yield (fcfy) we can take this relevant information and produce a ratio that is one of the most useful metrics in stock analysis:
Free cash flow yield (fcfy) we can take this relevant information and produce a ratio that is one of the most useful metrics in stock analysis:
Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the s&p 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation). Assuming an inflation rate of 2.5%, the forward rate of return on an investment in the s&p 500 is about 6.5% today (2.5% free cash flow yield plus 1.5% real growth plus 2.5% inflation). This is why the stock market has had an average rate of return of about 9%. Divided by the stock price (so that’s your “free cash flow yield”) plus the annual rate of growth in that cash flow while still making such payments.
