FAANG stocks, or Facebook (META -2.15%), Apple (AAPL 0.86%), Amazon (AMZN -1.54%) Netflix (NFLX -0.95%), and Google parent Alphabet (GOOGL -1.05%), have defied gravity over the past decade, with all five of the companies' shares obliterating the S&P 500's performance during this period. Indeed, all of these companies more than doubled the market index over this timeframe, with Netflix impressively seeing a return approximately twenty times greater than the S&P 500.

These stocks continued outperforming more recently. Over the past five years, Apple, Netflix, Amazon, Alphabet, and Netflix rose 436%, 433%, 373%, 234%, and 196%, respectively, while the S&P 500 gained 105%.

But what's interesting about these companies is that they all still seem to be firing on all cylinders, even after growing so significantly. Even more surprising, the company with the largest market capitalization -- Apple -- may very well be the most attractive investment of the group.

Here are three reasons Apple is my favorite FAANG stock at today's valuation.

A person looking at charts on a laptop.

Image source: Getty Images.

Massive cash flow

First, and foremost, there's Apple's impressive profitability. Approximately 28% of the tech giant's revenue falls down to free cash flow -- or the cold, hard cash left over after all operational expenses and reinvestment into the business for future opportunities are accounted for. Of the other five FAANG stocks, Facebook and Alphabet come closest to matching this, both generating a 26% free cash flow yield on their trailing-12-month sales.

But what's also notable about Apple's free cash flow is the sheer amount it generates. The iPhone maker's trailing-12-month free cash flow was greater than $90 billion, or about $40 billion more than Alphabet -- the FAANG stock with the second-greatest free cash flow. So next time you think Apple's $2.2 trillion market capitalization seems difficult to wrap your head around, think of this cash flow.

A rapidly growing dividend

Reflecting Apple's healthy cash flows and cash-rich balance sheet, the tech company is the only one of the five FAANG stocks paying a dividend. Over the trailing 12 months, Apple has paid out $14.2 billion in dividends. Further, based on the company's quarterly dividend of $0.22, Apple has a dividend yield of 0.7%.

More importantly, Apple's dividend is growing rapidly -- and it should continue growing for years to come. Over the past five years, Apple's dividend payments have increased by an average of approximately 9% every year. In addition, the tech giant is currently paying out only 18% of its annual earnings in dividends; this means Apple's current level of profitability will likely support dividend growth for years.

A robust ecosystem

Finally, it's worth noting that Apple has recently been seeing strong growth across every product segment, including iPhone, Mac, iPad, services, and its "wearables, home, and accessories" segment (the product category that includes products like Apple Watch, AirPods, and HomePod). This broad-based business momentum suggests the company has plenty of runway left.

While all of Apple's product segments are seeing strong growth and record levels of revenue as of late, the company's services segment is particularly promising. The segment generates growing streams of revenue from a broad range of valuable assets, including Apple's share of third-party app sales and subscriptions; Apple's growing suite of native services such as AppleCare, Apple Pay, Apple Music, and iCloud; App Store advertising; licensing; and more.

Apple's fiscal 2020 services revenue grew by 16% year over year and accounted for 20% of total revenue and 34% of gross profit. Given its broad-based momentum and the company's healthy product sales fueling further growth in Apple's installed base of active devices, this segment will likely see similarly robust growth rates over the next five years.

Though these are three reasons Apple is arguably the most attractive FAANG stock today at its valuation, all five of the tech giants surprisingly still appear to be compelling long-term investments. Of course, there're no guarantees when it comes to buying stocks. But the odds look favorable for investors who buy shares of these companies today and hold for the long haul.