Mastercard Inc. (MA), a solid 16% dividend increase.

MasterCard’s (NYSE:MA) dividend was increased by a solid 16%. Its overall yield is 0.84%. The firm started paying a dividend in 2006.

MasterCard provides transaction processing and other payment-related products and services in the United States and internationally. It facilitates the processing of payment transactions, including authorization, clearing, and settlement, as well as delivers related products and services. The company also offers value-added services, such as loyalty and reward programs, and information and consulting services. The company offers payment solutions and services under the MasterCard, Maestro, and Cirrus brands. MasterCard was founded in 1966 and is headquartered in Purchase, New York.

MasterCard has maintained a solid three-year growth rate of dividends of 38.7 percent. MasterCard currently ranks 10th in yield within the large cap services, business services category. The quarterly dividend for the February payment will be $0.22 versus the prior year rate of $0.19 per share. MasterCard Inc. is not a member of our Top 100 Dividend Stock List (see below).

The dividend will be paid at the new higher rate on February 9, 2017, to shareholders of record at close of business on January 9, 2017. MasterCard is currently priced at $104.82. Listed in the table below are the quarterly dividend payments since 2010.

Date Quarterly Dividend
1/9/2017 0.22
10/5/2016 0.19
7/6/2016 0.19
4/6/2016 0.19
1/6/2016 0.19
10/7/2015 0.16
7/7/2015 0.16
4/7/2015 0.16
1/7/2015 0.16
10/7/2014 0.11
7/7/2014 0.11
4/7/2014 0.11
1/7/2014 0.11
10/7/2013 0.06
7/5/2013 0.06
4/5/2013 0.06
1/7/2013 0.03
10/5/2012 0.03
7/5/2012 0.03
4/4/2012 0.03
1/5/2012 0.015
10/5/2011 0.015
7/6/2011 0.015
4/6/2011 0.015
1/6/2011 0.015
10/7/2010 0.015
7/1/2010 0.015
4/7/2010 0.015
1/6/2010 0.015


We examine MasterCard upon our five key criteria, which include; 

Quantitative Analysis:

Category Value Score
Dividend Yield 0.84% 395
Dividend Growth (3 to 6 year avg) 49% 21
Forward P/E 24.28  280
S&P Financial Rating A 120
Beta 1.05  150
Total Score   966

Additional quantitative information on P/BV ratio and historical yield;

% Yield 3 Year Div. Growth Rate 6 Year Div. Growth Rate BV 2016 P/BV Ratio 10 yr P/BV Low 10 yr P/BV High 5 yr lowest Yield % 5 yr max Yield %
0.84% 38.7% 59.6% 6.95 14.68 5.30 18.40 0.14% 0.84%

Positives;

  • MasterCard maintains an investment grade credit rating and a current dividend yield (0.84%) its five-year maximum.
  • MasterCard has maintained a three year growth rate of dividends of  38.7 percent.

Negatives;

  • MasterCard is trading above its ten-year average price/sales (P/BV) ratio.
  • MasterCard’s dividend yield is below that of the S&P 500 Index.
  • MasterCard maintains a beta of 1.05, higher than the average company.

Latest Earnings & Overall Analysis:

MasterCard issued its earnings data on October 28th. The company reported $1.08 EPS for the quarter, topping the consensus estimate of $0.98 by $0.10, and was up 19% year over year, excluding special items. The company had revenue of $2.9 billion in Q3, surpassing estimates of $2.74 billion. MasterCard maintains a solid return on equity of 64.3%.

MasterCard has generated strong earnings growth over the last few years, a result of solid revenue growth led by growth in spending, shift toward spending on cards, and pricing increases. The company has also been expanding its geographic footprint, resulting in an increase in membership. MasterCard has also increased its client base with new global agreement wins and tie ups with regional banks in U.S. Furthermore, MasterCard enjoys a great deal of competitive advantage and generates a healthy cash flow. MasterCard also maintains a solid earnings track record delivering positive earnings surprises in each of the last four quarters with an average surprise of 6.86%.
Though alternative payment methods and regulation may result in some share loss over time, MasterCard is set to benefit from strong secular trends over the next decade, as economies outside the U.S. grow and the use of cash declines. Additionally, payment data is valuable to marketing and advertising companies, who can use this information to improve their own offerings to customers and merchants. MasterCard will be able to grow revenue significantly without taking on too many additional costs.
Based on the firm’s lower than average dividend yield, high P/BV and high beta, MasterCard does not qualify as a member of our  Top 100 Dividend Stocks

MasterCard Inc. Dividend Yield Chart (Click to enlarge)

ma3

Chart Explanation:  Dividend growth stocks may be viewed favorably when the current yield is above historical readings for the past 5 years.

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