According to CNBC, Bank of America is steering investors toward quality stocks as the market stays near record highs, with strategist Jared Woodard saying free-cash-flow-rich names have been the best-performing factor over the past 30 years. Woodard said the S&P 500’s free-cash-flow yield is at record lows as major tech companies spend heavily on artificial intelligence, and he noted that Amazon, Alphabet, Meta Platforms, Microsoft and Oracle are expected to post negative free cash flow of $141 billion over the next 12 months.

Bank of America highlighted several non-AI stocks with strong free cash flow and dividend support, including Allstate, Cigna and Hasbro. Allstate has the highest free-cash-flow yield among the dividend payers at 18%, yields about 1.8% and is up roughly 17% year to date; the insurer also beat second-quarter expectations in August with adjusted earnings of $8.99 per share versus $6.06 expected. Cigna posted a second-quarter earnings and revenue beat in July and raised its full-year adjusted earnings guidance to $30.45 per share from $30.35, while Hasbro reported second-quarter earnings and revenue above expectations in July and said its "Magic: The Gathering" trading card game generated quarterly revenue above $500 million for the first time in the product’s more than 30-year history.