Cashless payments are getting more popular. The monthly volume of digital transactions is set to grow the fastest in the Asia-Pacific, but other parts of the world have also exhibited high growth rates in cashless payments. This has led to this list of fintech stocks to consider.
It’s not surprising to see an increase in these types of payments. It’s more convenient to pay with a credit card, and that’s often the only option for online shopping. You also get rewards like cashback and travel points if you use a credit card. You can’t say the same thing about cash purchases. Cashless transactions are also easier to track which helps with security.
Investors looking to profit from this continued shift may want to consider these fintech stocks.
Visa (V)
Visa (NYSE:V) is the largest credit card company by market cap, coming in at roughly $560 billion. Shares trade at a 32 P/E ratio and offer a 0.75% dividend yield.
The resilient consumer helped the company report stellar earnings in the first quarter of fiscal 2024. Revenue increased by 9% year-over-year while net income jumped by 17% year-over-year.
Consumers helped the stock achieve financial growth and healthy profit margins which exceeded 50%. The fintech firm put that money to use with $4.4 billion in stock buybacks and dividends. Although Visa has a low yield, the corporation has an excellent growth rate. The firm raised its quarterly dividend from $0.45 to $0.52 per share in 2023, marking a 15.6% year-over-year increase.
Visa offers the security of a blue chip stock along with growth potential. The rapid expansion of cashless payments bodes well for the debit and credit card leader. The stock is up by 25% over the past year and has gained 89% over the past five years.
Mastercard (MA)
Debit and credit card giants stand to gain the most as consumers switch to cashless spending. Mastercard (NYSE:MA) is one of those giants. The firm recently reported 13% year-over-year revenue growth and 17% year-over-year net income growth in the fourth quarter of 2023. These numbers suggest Mastercard is gaining market share and continues to establish itself as a top choice for consumers.
Mastercard also experienced an 8% growth rate in the total number of cards. The fintech firm had 3.084 billion credit cards in Q4 2022 but that number now stands at 3.332 billion cards at the end of the fourth quarter.
Cardholder growth is a key metric that shapes the company’s finances. If this number continues to grow, Mastercard’s earnings will also continue to grow. Consumers spending more money on goods and services will also benefit the fintech firm. Shares are up by 30% over the past year and have gained 111% over the past five years.
American Express (AXP)
American Express (NYSE:AXP) is the most affordable fintech stock of the major credit and debit card firms. Shares only trade at a 20 P/E ratio and offer a 1.10% dividend yield. That’s a much higher yield than what you’ll get with Visa or Mastercard.
Although American Express only has profit margins in the low double-digits, it has plenty of capital to raise its dividend. While dividend hikes are normal for the company, its recently announced 17% dividend hike is quite exceptional. The respectable yield, low valuation, and growth prospects may make American Express one of the best dividend growth stocks to own.
Shares have performed in line with the other fintech giants on this list. The stock is up by 28% over the past year and has gained 107% over the past five years. The Q4 2023 earnings report points to an 11% year-over-year increase in net income and a 23% year-over-year increase in net income. Diluted EPS surged by 27% year-over-year. This fintech stock is positioned to perform well and reward long-term investors. All in all, it’s one of those fintech stocks to buy.
On the date of publication, Marc Guberti did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
