Top UK stocks with healthy cash flows and dividend yields

Three promising UK stocks according to Alan Dobbie, co-manager, Rathbone Income Fund

Regent Street and red double-decker bus, London, UK
(Image credit: Getty Images)

When looking for stocks to buy we concentrate on how much cash they make and how much we’re paying to put them in our portfolio. We appraise cash flow rather than accounting profit because it represents a return more secure than promises by customers to pay later. It is also harder for companies to manipulate.

Businesses with healthy cash flow have the flexibility to repay their debts when they come due, reinvest in their businesses to create future profits, and pay dividends to shareholders. And as for valuation, the price you pay is one of the main determinants of your long-term returns.

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