Here at the Fool, we look for companies that are not only producing and growing earnings, but are producing and growing cash. After all, it's cash that lets a company invest in future growth and it's cash that we investors receive through dividends and share repurchases.

To find some of those generating lots of green stuff that ends up as dividends, I set up a simple screen:

  • First, I wanted companies earning at least 15% on equity. These are more likely to be producing shareholder value than destroying it.
  • Then I wanted companies trading at or less than 10 times free cash flow. These are bringing in the cash, but are possibly being underappreciated by the market.
  • Finally, I wanted those that were paying at least 2% in dividend yield.

Here are three from the resulting list that caught my eye today:

Company

ROE (TTM)

Price-to-FCF

Dividend Yield

Apollo Investment (Nasdaq: AINV)

16.6%

5.1

11.1%

Garmin (Nasdaq: GRMN)

28.8%

5.9

5.3%

NutriSystem (Nasdaq: NTRI)

23.1%

10.0

3.6%

Source: Capital IQ (a division of Standard & Poor's) and Yahoo! Finance.
ROE = return on equity. TTM = trailing 12 months. FCF = free cash flow.

Apollo Investment is a business development company that provides financing to small, private companies in the form of direct equity capital or mezzanine and senior secured loans. One interesting tidbit on this company is that its chief financial officer, Richard Peteka, has tripled his position to more than 30,000 shares since the beginning of the year.

It's trading at just a slight premium to its latest net asset value of $10.06 per share. However, the company does report fiscal-first-quarter earnings Wednesday, so reported NAV is bound to change. Apollo's done decently going through the recession, turning a loss in fiscal 2009 into a profit in fiscal 2010. Plus, it didn't receive a "going concern" notice from its auditor, unlike fellow BDC American Capital (Nasdaq: ACAS).

Garmin is in a bit of a tough spot. Every smartphone maker from Apple to ZTE, it seems, can do GPS mapping and turn-by-turn directions, Garmin's forte. And during the recession, it slowed drastically from its 70% revenue growth rate to actually shrinking revenue last year while at the same time seeing margins squeezed. Still, Garmin has no debt, a significant cash hoard of $1.3 billion thanks to strong cash flow, and an enviable return on equity ratio. The disadvantage for those seeking income is that it pays its dividend annually rather than quarterly.

NutriSystem has been serving the needs of dieters for nearly 40 years, but only got enough gravitas of its own to begin paying a dividend in 2008. Even though it's been slowing down on sales and net income the last couple of years, it hasn't lost money and consistently brings in more free cash flow than net income. Except for a brief time in 2008, it's remained essentially debt-free for the last nine-plus years. Pretty nimble footwork.

However, not everyone believes NutriSystem can survive, as nearly 40% of its float was sold short as of the middle of last month.

Do any of these deserve a spot in your portfolio? Only you can answer that question after checking into them further. But based on the quick looks above and their relatively cheap prices right now, they do deserve a second look.

Fool analyst Jim Mueller does not own shares of any company mentioned. Apple is a Motley Fool Stock Advisor pick. Feel free to check out our disclosure policy.