Xerox stock pays you best
Perhaps most important to investors, though, is the simple fact that out of the three big IT companies discussed here, Xerox Corporation (NYSE:XRX) is the one generating the most cash from its business — and it gives you the biggest free cash flow bang for your buck.
Measured by dividing a company’s market capitalization (the price you pay for Xerox stock) into its free cash flow (the money your investment generates for you), Xerox offers investors easily the best “free cash flow yield” of the three companies named. Put even more simply, for every $1 you invest in a share of Xerox Corporation (NYSE:XRX) stock today, you can expect the company to generate nearly 17.4 cents worth of real, cash profits on your investment.
Xerox may ultimately use this cash to pay you bigger dividends (although its 2.6% dividend is already pretty big), to buy back shares (increasing the size of your stake in the company for every share it takes off the table), or to reinvest in its business and maintain its lead over rivals for years to come. Any way you look at it, though, Xerox Corporation (NYSE:XRX)’s ability to generate cash offers investors a great reason to invest.
And that, Fools, is the reason I think now’s a great time to buy Xerox stock.
The article It’s Time to Buy Xerox Stock. Here’s Why. originally appeared on Fool.com.
Fool contributor Rich Smith has no position in any stocks mentioned. The Motley Fool recommends Accenture and owns shares of IBM.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.