The Cash Cows ETF Series

Cash Cows Index Strategy

• Free cash flow is the cash remaining after a company has paid expenses, interest, taxes, and long-term investments. It is the source from which dividends are paid.
• The ability to generate a high free cash flow yield indicates that a company has the capacity to pay dividends. Paying a dividend signals management is confident in the long-term viability of the business.
• Dividends are a source of income to investors.
• Watch to learn more about how Pacer Cash Cows Index ETFs work.

Impact of Current Dividend Yield

as of 3/31/18¹

1. Capital Appreciation
Using free cash flow yield to measure the sustainability of a company may produce a higher return with lower volatility over time.
 

2. Reduced Volatility
Companies with a high free cash flow yield and a high dividend yield have historically declined less in market downturns.

3. Yield
Companies with a high free cash flow yield are better positioned to grow and maintain their dividends, but there is no guarantee dividends will be paid.

⁽¹⁾Dividend yield is the annual percentage of return earned by an investor on a common or preferred stock. The yield is calculated by dividing the amount of the 12 month dividends per share by the current market price per share of the stock. There is no guarantee dividends will be paid.
Source(s): FactSet

Pacer Global Cash Cows Strategy Overview

An objective rules-based methodology that uses a quality and value screens to select top companies in the index universe.
All data as of December 2017 semi-annual rebalance.

Pacer Global Cash Cows Dividend Index Characteristics

as of 3/31/18

Source: FactSet
⁽¹⁾The individual components of the index are weighted by their total market capitalization. Market capitalization is determined by multiplying each company’s market price by their total outstanding shares. Companies are ranked in descending order based on their market cap in dollars.
⁽²⁾Financial companies, other than real estate investment trusts (REITs), are excluded from the Index universe. In addition, companies with negative free cash flow are excluded based on FactSet analyst consensus estimates for average projected FCF and earnings over the next two years.
⁽⁴⁾Remaining 100 companies are weighted by their trailing twelve month dividends. Dividend weighting is calculated by adding the 100 companies’ dividends and dividing the total by each company’s trailing 12 month dividends.
Definitions
Free Cash Flow (FCF): A company’s cash flow from operations minus capital expenditures (expenses, interest, taxes, and long-term investments)
Enterprise Value (EV): A company’s market capitalization, adjusted to eliminate any capital structure bias (i.e. by adding debt and subtracting cash or cash equivalents)
⁽³⁾Free Cash Flow Yield: FCF/EV. Measures a company’s total free cash flow relative to its enterprise value. This is an internal statistic and does not constitute investor yield.