With the stock market still trading near record highs, finding reasonably priced opportunities is getting harder. Bank of America says investors may want to look beyond the biggest AI names and focus on something becoming increasingly scarce across the market: companies generating large amounts of free cash flow.
That may sound less exciting than artificial intelligence, but historically it has mattered. Bank of America strategist Jared Woodard says free-cash-flow yield has been one of the strongest measures of corporate quality over the past 30 years because cash is difficult to manipulate and gives companies far more flexibility when conditions change.
For income investors, three names on the firm’s list stand out in particular: Allstate, Cigna and Hasbro. All three generate significant free cash flow, pay dividends and have been rated Buy by Bank of America.
Why Cash Flow Is Becoming More Valuable
Free cash flow is the money a company has left after covering its operating expenses and the capital investments required to run the business. That cash can be used to increase dividends, repurchase shares, reduce debt, make acquisitions or reinvest for future growth.
Right now, however, some of America’s largest companies are spending extraordinary amounts of money.
Amazon, Alphabet, Meta, Microsoft and Oracle are expected to collectively generate negative $141 billion in free cash flow over the next 12 months, according to Bank of America’s analysis, largely as the technology giants pour money into AI infrastructure.
That spending could eventually produce enormous returns, but it is also changing the financial profile of the broader market. Bank of America says the S&P 500’s free-cash-flow yield has fallen to record lows, making companies already producing large amounts of excess cash increasingly unusual.
Woodard summed up the firm’s argument simply: “Buy what is scarce.”
The strategy has already been working. Bank of America’s high-free-cash-flow stocks were up 43% year to date at the time of its analysis.
For investors who also want income, these three stocks stood out.
Allstate: The Biggest Cash Generator of the Three
Allstate (NYSE: ALL) has an 18% free-cash-flow yield, according to Bank of America, easily the highest among the three dividend stocks. It also yields roughly 1.8% and had gained about 17% in 2026 through the period covered by the analysis.
The insurer’s recent results help explain why cash generation has been so strong. Allstate comfortably exceeded expectations in the second quarter, reporting adjusted earnings of $8.99 per share compared with the $6.06 analysts surveyed by FactSet had expected.
Strong earnings have also given the company more flexibility in how it returns money to shareholders. Allstate has been buying back stock in addition to paying its dividend, giving investors two ways to benefit when excess cash accumulates.
The obvious risk is that insurance profits can change quickly. Catastrophe losses, claims inflation and changes in pricing can all affect earnings, so investors shouldn’t assume an 18% free-cash-flow yield will remain at that level indefinitely.
Still, Allstate illustrates the larger point behind Bank of America’s strategy. A modest dividend yield doesn’t necessarily mean a company has limited capacity to reward shareholders. In some cases, the amount of cash being generated behind that dividend may be considerably more important.
Cigna: A Stock That Hasn’t Kept Up With the Business
Cigna (NYSE: CI) offers a different setup. Its free-cash-flow yield is roughly 9%, while its dividend yield is around 2.3%.
The stock has been essentially flat this year, even as the underlying business has continued to perform. Cigna beat Wall Street’s earnings and revenue expectations in the second quarter and raised its full-year adjusted earnings guidance to at least $30.45 per share.
That disconnect is what makes Cigna interesting.
When a stock has already surged, strong results can be largely reflected in its price. Cigna enters from the opposite direction. The shares have struggled to gain momentum even while earnings expectations have remained relatively strong.
Wall Street analysts are also generally positive on the company. FactSet data cited in the original Bank of America analysis showed an average overweight rating, with consensus price targets implying roughly 24% upside at the time.
There are risks, particularly rising healthcare costs. Higher medical expenses can squeeze margins for insurers even when revenue is growing, making Cigna’s medical-cost trends one of the more important numbers for investors to follow.
But for income investors, the basic argument is straightforward: Cigna is generating substantial cash, paying a dividend and producing earnings growth without the stock having participated in the market’s biggest gains.
Hasbro: The Highest Dividend Yield Comes With a Growth Story
Hasbro (NASDAQ: HAS) rounds out the group with a roughly 7% free-cash-flow yield and a dividend yield of about 3.2%, the highest dividend of the three.
At first glance, Hasbro might seem like the odd name on this list. The company is best known for toys, an industry that can be highly dependent on consumer spending and changing tastes. But an increasingly important part of Hasbro’s business looks very different from the traditional toy aisle.
Its Wizards of the Coast division, particularly Magic: The Gathering, has become a major growth engine. During the second quarter, Magic generated more than $500 million in quarterly revenue for the first time in the franchise’s more than 30-year history.
That helped Hasbro beat Wall Street expectations for both adjusted earnings and revenue.
The significance goes beyond one successful quarter. Games and intellectual property can carry attractive economics because the company can monetize established franchises repeatedly without relying entirely on physical toy sales.
Hasbro still needs to prove that the recent momentum can continue, especially after such strong growth from Magic. But investors are being paid a roughly 3.2% dividend yield while they watch that story develop.
Don’t Look at the Dividend Yield Alone
The most useful takeaway from Bank of America’s screen may have little to do with which of these three stocks offers the biggest dividend today.
Consider the numbers:
| Company | Ticker | Free-Cash-Flow Yield | Dividend Yield | 2026 Return* |
|---|---|---|---|---|
| Allstate | ALL | 18% | 1.75% | 17.3% |
| Cigna | CI | 9% | 2.28% | -0.3% |
| Hasbro | HAS | 7% | 3.19% | 7.3% |
*Bank of America free-cash-flow data as of Sept. 9, 2026; market data as of Sept. 21, 2026.
Hasbro has the highest dividend yield, but Allstate generates substantially more free cash flow relative to its market value. Cigna sits between the two.
That matters because today’s dividend tells investors how much money they are currently receiving. Free cash flow can provide clues about how much financial room management has for tomorrow.
A company producing considerably more cash than it distributes can potentially increase dividends, buy back shares, reduce debt or reinvest in growth. A company paying out most of the cash it generates has fewer options if business conditions deteriorate.
That is why investors hunting for dividend stocks may want to look beyond the headline yield.
The Bigger Story Is What AI Is Doing to the Rest of the Market
There is also a broader market shift worth watching.
The AI boom has created one of the largest corporate investment cycles in recent memory. Technology companies are spending enormous amounts on chips, data centers, power and infrastructure because they believe the eventual opportunity will justify the cost.
They may be right. But the spending itself has consequences.
As more capital gets absorbed by AI, companies with established businesses that consistently throw off excess cash begin to look different by comparison. They don’t need to spend tens of billions of dollars simply to remain competitive in the industry’s latest arms race.
That could make free cash flow increasingly important if the market becomes more selective about where it places a premium valuation.
For dividend investors, the lesson is simple. Instead of starting with “Which stock pays the highest yield?”, it may be more useful to ask “Which company has the most cash available after paying its bills?”
Allstate, Cigna and Hasbro arrive at that answer through three very different businesses. Allstate is benefiting from strong insurance results, Cigna continues to produce substantial cash despite a sluggish stock price, and Hasbro is combining its dividend with growth from Magic: The Gathering.
None is without risk, and free cash flow can change as business conditions change. But all three have something that is becoming harder to find across an increasingly expensive market: cash left over after the spending is done.
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