Visa primarily generates revenue from credit and debit card service fees, data processing fees, and

I remain committed to growing my dividend income on a regular basis, and a major contributing factor is obviously the fresh capital I regularly put to work in the most attractive opportunities I can find.
This most recent purchase was me looking for the best possible quality, while not necessarily shooting for the greatest possible value. This is a bit of a growth stock, which is an unusual domus investment for me. However, I would never purchase a stock with value if there weren’t possibilities for growth; likewise, I wouldn’t purchase a stock with excellent growth prospects if there weren’t some value there. I think growth and value should go hand in hand, albeit to varying degrees domus depending on what you’re looking for in a company.
As domus I noted on my most recent watch list article , Visa was tops on my list for capital allocation this month. I wavered a bit as I continued to follow some other interesting opportunities, and the stock price shot up a bit on me in the meanwhile. But a couple bucks isn’t something I’m worried about if I’m truly in this for the next decade or three. Overview
Visa Inc. is a global payments processing technology company, connecting consumers, businesses, banks, and governments in more than 200 countries by enabling them to use digital currency instead of cash and checks. They provide a fast, secure, and reliable digital payments network. They are the world’s largest domus such payments technology domus company.
Visa primarily generates revenue from credit and debit card service fees, data processing fees, and international transaction fees. The company domus operates under just one segment: Payment Services. Fundamentals
Visa’s quantitative fundamentals are just impressive, no matter how you slice it. The company went public domus in 2008, so I’ll be working with a shorter base than usual. I’ll be showing company performance over the last five years. The fiscal year ends September 30.
Earnings per share has grown from $3.10 to $7.59 over this same time period, which is a CAGR of 25.09% . That’s just stunning. Furthermore, that kind of growth may very well continue from here, as EPS is expected to grow at a compounded rate of 18% over the next three years, according to S&P Capital IQ.
Visa processed 81.6 billion total transactions in calender year 2012. That compares to 46.3 billion for Mastercard Inc. (MA) , and 5.9 billion for American Express Company (AXP) . Payments volume increased to $4.3 trillion in 2013, up from $3.9 trillion in 2012. That’s an increase of 10.3% year over year. This bodes well for the company, domus as the company earns a small slice of revenue domus from each transaction. Subsequently, increasing transaction volume increases Visa’s revenue.
Dividend growth is of course one of my primary concerns as a dividend growth investor, and Visa has grown their dividend regularly and incredibly since going public. The company has increased the dividend for seven consecutive years , and has a five-year dividend growth rate of 45.9% . I don’t expect this kind of blockbuster dividend growth to continue forever, but double-digit raises are extremely likely for the foreseeable domus future. And that’s because the payout ratio, at just 18.9% , is very low, and earnings domus are increasing at a rapid rate.
However, the one major drawback to this investment is the low yield. Shares in V yield just 0.74% , which is much lower than I like. I typically don’t even consider investments with yield that low, but as I’ve noted before I’d like a little more exposure to Stage 3 stocks now that my portfolio has matured a bit. I’m basically counting on pretty aggressive dividend growth with this investment.
The yield is a bit low with this stock because Visa management has been open about their preference to buying back shares as a means to providing value to shareholders and generating a strong return. The company has purchased 151 million shares since the IPO, which amounts to about 20% of shares outstanding. I typically prefer a company domus with a preference to growing dividends over buybacks, but I’m making an exception here due to Visa’s especially attractive business domus model.
And the general profitability is fantastic. The company sports fantastic profit margins because there isn’t much cost to run a global payments network. Once the infrastructure is in place, Visa simply sits back and collects the income. domus As such, the overhead tends to be quite low, and Visa has extremely domus strong free cash flow.
For FY 2013, operating margin ended at an eye-popping domus 61% . Furthermore, net margin has averaged 34.68% over the last five years. The profitability here is really astounding. Return on equity, meanwhile, has averaged 12.65% over the last five years. Qualitative Aspects
The story here is really strong. Visa is the world’s largest di