Is Visa a Buy Right Now?

Full Dividend Stock Analysis

As investors look for dividend stocks in 2024, Visa (NYSE: V) is a big name in the financials. With a $589 billion market cap and global presence in digital payments, many investors wonder if Visa is a dividend stock worth buying. Let’s get into Visa’s fundamentals and see if it’s a buy now.

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Company Overview: A Digital Payments Giant

Visa is a payments technology company that enables digital payments through its VisaNet network. Founded in 1958 and headquartered in San Francisco, the company is the middleman between consumers, merchants, financial institutions and businesses worldwide.

Key Investment Points

1. Growth

• Revenue growth: 11.03% (10yr avg)
• Net Income growth: 24.36% (10yr avg)
• EPS growth: 31.57% (10yr avg)

Visa’s growth is impressive over the long term.

2. Profitability

• Net Profit Margin: 54.95%
• Return on Equity (ROE): 49.64%
• Return on Assets (ROA): 20.89%
• Return on Invested Capital (ROIC): 33.11%

Visa is very profitable and has a strong competitive advantage.

3. Financial Health

• Debt-to-Equity Ratio: 0.53
• Debt-to-Assets Ratio: 0.22
• Dividend Payout Ratio: 21.36%

Visa has a conservative financial structure with manageable debt and a sustainable dividend payout.

Brand Strength and Market Position

• Global Brand Ranking: 62nd
• Morningstar Economic Moat: Wide
• Credit Ratings: Aa3 (Long-term) and P-1 (Short-term) from Moody’s

These metrics show Visa’s strong market position and financial stability.

Concerns

1. Valuation

• Current Price: $308.50
• P/E Ratio: 31.24 (Above sector average)
• Price-to-Book Ratio: 15.76 (Above target range)
• Morningstar Fair Value: $272 (Trading above fair value)

2. Total Yield

• Dividend and buyback yield: 3.32%
• Below 5% threshold for dividend stocks

Why Buy Visa Despite These?

1. Business Stability

• Growth in revenue
• Growth in net income
• Positive and stable margins
• Free cash flow generation

2. Shareholder Friendly

• Dividend increases
• Ongoing buyback
• Share count decreasing

Bottom Line

Visa scores 7.78 out of 10 using a 27-point dividend stock framework. Here’s what that means for different types of investors:

Long-term Dividend Investors

The yield isn’t great but the payout ratio is low and growth is consistent so there’s room for dividend increases.

Growth Investors

The growth and wide moat make it a good pick for capital appreciation.

Value Investors

Valuation suggests it’s overvalued so wait for a better entry point.

Bottom Line

Visa is a good company with good fundamentals and growth. Valuation is rich but financials are solid, performance is consistent and there’s dividend growth potential for long term investors.

Value investors may want to wait for a pullback to $272 before buying or adding.

Interested in knowing how I analyze the dividend stocks ? Click here to see my full methodology!

Disclaimer: This analysis is based on current data and should not be considered as financial advice. Always conduct your own research and consider consulting with a financial advisor before making investment decisions.