Visa Can Still Move Higher in 2014

Card companies Visa , MasterCard , Discover Financial Services and American Express handily beat the S&P 500 in fiscal 2013 with solid share gains. Visa was up 36%, MasterCard gained a massive 61%, Discover Financial Services climbed 37%, and American Express shot up 46%. In comparison, the S&P 500 was up 30%, its best year since 1997. Although dividend stocks routinely outperform their non-dividend paying brethren, growth stocks with modest dividends but potentially greater runways for growth -- such as Visa -- are good long-term investment tools.

Visa is not your classic dividend champion, yielding just 0.8%. What Visa lacks in hefty dividends it makes up for in other key arenas: it commands the best gross margin among the four card companies with a healthy 43%, and the highest net income of the four. Visa finished fiscal 2013 with a $5 billion net income, a huge 18% jump over last year's figure, while its full-year net income grew 23% to $7.59 per diluted share. Visa looks like a good growth stock, and its valuation relative to MasterCard's still looks quite cheap.

Despite its recent run-up, Visa still has some upside potential.


Income and dividend growing exponentially
Since its maiden year in the market, Visa's income and dividend have grown at a sweltering pace. Its income before taxes has more than doubled since 2009 to hit $7.2 billion in 2009. This sustained growth is part of the reason it was inducted into the Dow Jones in 2013.

 Visa's bottom-line grew at an even faster clip than its top-line, with its dividend more than tripling over the same timeline, to stand at $1.32 in fiscal 2013.

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