Do you use credit card? Or debit card? Sure you do! The only question is which one. Visa? Mastercard? American Express? Market for paying cards is very concentrated and business like Mastercard or Visa are growing rapidly.

Although Mastercard is not The Dividend Aristocrat I would like to write some of my thoughts. This business model is easy to understand – earning some fee from each processed transaction. The trend is obvious – less and less cash payments, growth of e-commerce etc. All is supporting Mastercard. In the last quarter business was up significantly both as it comes to credit & debit cards and in each geographical region.


But what is more important is stability of growth:


Business has a very high operating margin:


Which is why fintech companies might be interested in taking some market share. New technologies in payments might in long term become more and more competitive. I can imagine myself that in the long run people will bring only phone with them – wallet will be useless (I wish my phone will not be pickpocketed then).

Investors love such stable growing companies. This is why valuation is not low (on 2017 estimates):


P/E = 25

Dividend yield is symbolical, less than 1%.

The main issue is appreciation of capital, not dividends:


This chart is really awesome!


Summing up, you know that I will not buy shares at all-time highs, but in case of MA I see further potential, although valuation is not low. If only share price drops to around $90 I will consider it as special occasion and I am planning to buy shares.


Disclaimer: MA – no position