As you might have read about it here, I now do live webinars and certainly have fun doing so. I have been surprised by the positive interest attendees had towards many of my stock picks. This is how I came to the idea of sharing here some of my “Video of the Week”, during wich I go through a company recent news or results and explain why I believe it is currently a good or a bad pick for a dividend investor.
This low yielder is often dismissed by dividend investors. However, this company offers an almost vital service combined with a double digit revenue and earnings growth. Best of all, all of this will continue forward! You MUST watch this to learn more about this stock pick!
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00:00 Speaker 1: Hey, fellow investors, this is Mike McNeil from Dividend Stocks Rock. So I hope you’re doing well today. Today, I wanna talk about a company that is often ignored by dividend investors, mostly because their dividend yield is very low. We’re talking about 0.50-0.60%. You may wonder, Mike, what’s the matter of covering such a low yielding stock? The thing is, the business model is just incredible. Imagine a company that is providing almost a vital service that is evolving in an oligopoly, meaning that there’s very limited competitors, where size does matter and that company shows double-digit revenue and earnings growth rolled for the past 10 years, and it will continue going forward.
00:45 S1: You may have guessed it already, but I’m talking about Visa. Ticker is quite simple, simply V. A lot of people think that Visa is a financial company. I know that it’s falls into the financial industry when you look into the sector, but it’s really more a tech stock. The reason behind this is, Visa is not responsible for… It’s not acting like a bank, it’s not responsible for the money loss or anything. Those are the bank’s problem. Visa is basically a networker. Its job is to put everybody together and make sure that the money goes from the customer to the merchant, or to the government. Basically, it just creates a huge network across the world. It currently has over three billions of Visa cards and dealing with over 44 million merchants. Basically, wherever you go, you can pay with your Visa card.
01:42 S1: And that is a huge advantage because there’s an important movement of money in terms of transaction. We used to pay cash, now there’s a lot more people paying with debit card or credit card. One of the biggest advantage of Visa is a lot of people or customers are receiving incentives to buy with their Visa cards because they have points, they have cash rewards, they can’t travel with it. We can see that the money transactions are moving from cash to digital information. Second point is digital commerce, obviously. Did you believe that 10 years ago when Visa did its IPO, Amazon was not even part of its top 20 merchants and now you can guess that it’s one of the most important. The movement of habits from customers, they’re all going online right now. They wanna buy more stuff online instead of taking their car and going to the shop and what better way to do it than paying with their credit cards.
02:43 S1: There’s also a third rule vector for Visa, is that they are using their cash flow to improve their service, and also to develop other technology. Now, we’re talking about payments, facilitating solutions among businesses, so business to business, government to government, business to government, etcetera. Basically, any kind of money movement is being offered now with Visa and this is a huge trend that is going to keep up a lot faster in the future. A key point here is Visa is the largest networker in terms of money transaction and we all know that the most important thing we want when we want to transfer money is to trust the company that is doing it. It’s our own money. We wanna make sure it goes to the right place and the merchant wants to make sure that it receives it. Dealing with leaders in the market, like Visa or MasterCard, is a no-brainer, and this will continue looking forward.
03:43 S1: Then I’m just gonna finish this video talking about dividend growth. We’re talking about a company that has doubled its dividend payment over the past five years. Even though the yield is low, it shows the strength and the growth behind Visa. Keep in mind that five years ago, Visa used to trade around $40. Now, it’s now around 140. This means that while the company has doubled its payment, the stocks surge by more than three times its value and and it’s keep going forward, as I mentioned, because all the money is going over there. The latest quarters, we’re still seeing double-digit revenue growth and earnings growth for Visa, so you can expect a high single-digit to a double-digit dividend growth going forward as well. Everything points towards the right direction. I can understand that it’s definitely not for an income-seeking investor, but if you have time, if you wanna add growth to your portfolio with a minimum risk, this is the kind of company you should look at.
04:48 S1: Now, everything that has been said or demonstrated in this webinar cannot be taken as buy or sell recommendation. I am not your financial broker or your financial adviser, therefore, you cannot sue me if you’re losing money after this video. On the good side of things, you won’t have to pay me a dime if you’re making a quick buck on Visa. I hope you like this video. Don’t forget to subscribe to my channel and head over to The Dividend Guy blog to register to my newsletter to make sure that you never miss an upcoming video or webinar. See you later, and happy investing.