Visa (NYSE: V) has proven to be a growth engine throughout its lifecycle. With a market capitalization of $463 billion and revenue of $24 billion in 2021, it is the world’s largest digital payment service provider.
End the last quarter Q1 in 2022, net revenue was $7.1 billion, up 24% from last year. Other factors that contribute to the valuation of the company are the growth and stability as well as the network effects that the company enjoys.
The more consumers enter the network, the more merchants will also seek to join in enriching the whole system. This creates a virtuous circle of more consumers and more merchants, which makes network effects more valuable.
Stock market performance and analyst forecasts
The stock experienced a top-to-bottom performance from December 2021, creating a double bottom, a technical signal indicating a change in trend and a reversal in momentum from the previous price action.
Currently, the stock is trading below the 20-50-200 day simple moving averages (SMA) and is looking to reverse the price trend by breaking above the SMAs.
Wall Street analysts are giving the stock a strong buy rating, seeing the average price over the next 12 months at $277.13, which is a 29.05% increase from the current trading price of $214.75. The most optimistic analysts see the highest price at $312, which is quite high compared to the current price.
Excellent total return possible
Given that the company has growing earnings and good cash flow, it should be assumed that paying dividends without weakening the balance sheet should not be a problem for Visa in the future.
The current dividend is 0.7% per year with a possible annual growth of 18%, which corresponds to the average growth rate of the previous five years, as indicated in the company’s earnings report.
Visa is a household name that shouldn’t be overvalued at today’s prices, it has a strong balance sheet and is profitable. It is possible that the stock will become a high yielding dividend investment over time if cash flow continues to flow at the same rate as it does today.
Finbold has covered dividend stocks worth watching that could complement Visa stocks well. View the report here.
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