Should you buy Visa stock right now? Visa (NYSE:V) is an international financial services company that issues credit & debit cards to foster global payments.
In this article, I’m going to share with you 5 reasons why I think Visa stock is an excellent buy. I’m currently holding this stock in my FIRE portfolio because I love their growth prospects plus they pay a dividend as well.
1. Strong & Well Known Brand
When looking for stocks in my dividend growth portfolio, I tend to favor companies with a strong brand & sizeable market share. Visa owns a whopping 61.5% marketshare in the United States among the major credit card networks and their brand is easily recognizable and trusted. In fact, a large majority of Americans carry a Visa credit or debit card around in their wallets.
2. Revenue Growth is Stable and Predictable
I prefer dividend growth stocks that are stable and predictable. I’m not trying to catch the next Amazon or Netflix with this particular investment strategy. Visa is a perfect candidate in my opinion because they not only generate a ton of revenue ($20 billion annually) but still have a ton of growth left ahead of them. Most people in the developing world (Asia, Africa & Latin America) do not have access to banking or credit cards. These countries are slowly adopting the banking system and Visa will most likely be the dominant payment network when developing populations gain access to credit.
While a recession could damper consumer spending in the short term, many families use their Visa cards to buy basic needs like food and clothing. You won’t stop buying food or clothes just because the stock market is down,
3. 10 Years of Annual Dividend Growth
If you’re a dividend growth investor, then take a closer look at Visa because they have 10 consecutive years of growing dividends. Growing dividends are a strong sign of business health since companies cannot continue to increase payouts unless revenue is increasing while keeping costs at bay. While the current dividend yield isn’t as attractive as other stocks, I think Visa has a good chance to appear on the Dividend Aristrocrats list in the next 15 years.
4. 26% Annualized Return Since IPO
Yes, this number is a bit skewed since Visa IPOed during the beginning of the biggest bull market run in history. But still, Visa has returned a ton of value to investors since they went public. 26% annual return aint half bad plus a growing dividend is the icing on the cake. The S&P 500 returned 13% over the same time period so Visa shareholders outperformed the total market by a lot.
5. P/E of 35 is within Historical Ranges
P/E ratio is a popular metric to judge how cheap or expensive a stock can be.
Of course, some industries tend to have higher P/E ratios than others. So I always look at historical trends to see whether or not the ratio is too low or high. As you can see from the chart below, Visa is well within historical ranges:
Disclaimer: I am long Visa shares. I am not a certified financial advisor so please do your own research before buying any stocks. I was not compensated nor paid to publish this article.
While his background is mostly related to trading stocks, he recently gained interest in real estate crowdfunding with Fundrise.