Each year we select our Lucky 13-a diversified group of high-quality companies that offer good value and have the potential to outperform the broad market-explains Kelley Wright, editor of Investment Quality Trends.

We focus on stocks with strong histories of growth, dividend, free cash flow, free cash flow yield, return on investment, earnings per share growth, and high S&P Quality Rankings.

I know fundamentals aren't that exciting, but good value-over the long-term-will reward you with rising dividends and capital growth to meet your needs.

Not every stock in each Lucky 13 will be a winner; however, there were enough winners to produce thirteen years of positive total returns for this annual portfolio.

Applied Industrial Technologies (AIT)

This industrial machinery firm was founded in 1923 and is headquartered in Cleveland, Ohio. A consistent free cash flow generator; could retire its debt and still have over a year of operating cash.

Free cash flow yield of 8.6%. Return on invested capital averages between 10% and 15%, which is an above average moat. Ten-year CAGR dividend growth equals 13%.

AT&T (T)

AT&T generates plenty of free cash flow, which is more important than an earnings payout ratio distorted by non-cash charges. This isn't a growth stock but it does deliver yield-5.5% and 5.6%-on a free cash basis.

Boeing (BA)

More cash on hand than total debt and $5 of cash for each $1 of dividend it paid last year. Return on invested capital is consistently in excess of 15% and a free cash flow yield of 6.3%.

Coca-Cola (KO)

Coca-Cola isn't the growth stock it once was but it is still an iconic brand that consistently generates free cash flow, return on equity, and return on invested capital.

Like AT&T, its payout ratio is distorted by non-cash charges that don't impact the dividend's safety. Free cash flow yield = 4.4%.

CVS Health (CVS)

CVS is a high-growth company on both a price and dividend basis with low debt and a skimpy payout, which suggests there is plenty of room for further growth. The free cash flow yield is 5.2%.

Emerson Electric (EMR)

A Dividend Aristocrat with 20 plus years of dividend increases. A consistent generator of free cash flow and a return on invested capital between 10% and 15% most years.

Free cash flow yield is 5.6%. This is a great core position and long-term hold when purchased at Undervalue.

NEXT PAGE: Seven More of the Lucky 13

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Gap (GPS)

This specialty apparel and retailer has a balance sheet that is in great shape and consistently generates free cash flow.

The kicker is the CAGR of the dividend is in excess of 20% for the last three, five, and ten years respectively. Lastly, the free cash flow yield is a whopping 13.6%.

International Business Machines (IBM)

Okay, so 2015 was rough for IBM and they took on some debt to buy back a lot of stock.

The bottom line is there is plenty of free cash flow and the CAGR of the dividend is in the teens for the last three, five, and ten years respectively. The free cash flow yield is 9.7%.

Omnicom Group (OMC)

Omnicom is one of the largest providers of advertising and marketing communication services in the world.

A consistent free cash flow generator, the return on invested capital is between 10% and 15% most years.

The CAGR of dividend growth has been over 20% the last three and five years and 15% over the last ten years. The free cash flow yield is 6.5%.

UnitedHealth Group (UNH)

The compound annual growth rate (CAGR) of the dividend at UnitedHealth has been spectacular; 57% the last ten years.

With an EPS payout in the low 30% and a free cash flow payout of 25%, this consistent free cash flow generator still has lots of room to grow. The free cash flow yield is 5.7%.

United Technologies (UTX)

United Technologies has a decent balance sheet with sufficient cash to pay off the debt and still have over 1? years operating cash.

The relatively modest EPS and free cash flow payouts also leave room for future dividend increases. Free cash flow yield is 6.4%.

Texas Instruments (TXN):

The world is in love with technology and to make it all work you need a grunt like TXN.

Very modest debt levels for a tech company and the payouts leave room for future dividend growth, which has been stellar at well over 20% for the last three, five, and ten years. Free cash flow yield is 6.0%.

Wal-Mart Stores (WMT)

Retailers are currently getting no respect, but with their balance sheet, Wal-Mart Stores should.

The EPS and free cash flow payouts leave plenty of room for future dividend growth and WMT could pay off its debt and have 1 2/3 years operating cash left. The free cash flow yield equals 8.6%.