BSQKZ - Why Visa Could Be A Better Investment Than Mastercard

2024-04-04 11:39:58 ET

Summary

• Visa Inc. and Mastercard Incorporated are among the highest quality, non-cyclical businesses money can buy today.
• Benefiting from ever-increasing M2 supply, move towards a cashless society and elevated inflation, both businesses are expected to continue growing quickly.
• The low dividend yield is well compensated for by the double-digit DGR and the yield on cost could be over 3% in 10 years' time.
• Given the quality, both trade at a premium valuation, yet Visa offers better risk-adjusted ROI even with lower forward EPS growth.

Are you looking for a dividend growth company to add to your portfolio?

You do not need to look much further than the two payment processing companies, Visa Inc. ( V ) and Mastercard Incorporated ( MA ).

Both of the companies are among the highest quality businesses that money can buy today with non-cyclical, resilient business models, benefiting from tailwinds such as ever-increasing M2 supply and move towards a cashless society.

While the yield for each of these companies is <1%, the DGR well compensates for the lack of yield for investors which are willing to wait. The dividends are expected to grow at around 10% to 15% annually over the next decade and the yield on cost in 10 years may be >3% or higher....

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