Why Mastercard Stock Is Your Best Dividend Pick for 2024

MA stock deserves a place in practically every passive-income investor’s portfolio

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Safety is never guaranteed in the financial markets. However, it’s a reasonably safe bet that Mastercard (NYSE:MA) will continue to reward its loyal investors with dividend distributions, quarter after quarter. Mastercard is a premier, blue-chip company that respects its shareholders, so my top dividend-grower pick for this year is MA stock.

At the same time, I don’t want you to buy Mastercard stock just for the quarterly distributions. Investors should understand that Mastercard is a solid financial-sector business.

In a world that’s going cashless, Mastercard remains a stalwart giant among credit and debit card issuers. So, even if you’re excited about the “Magnificent Seven” and promises of fast gains with other stocks, consider a reliable passive-income opportunity in 2024 with MA stock.

Seek Consistency, Not Bribery, With MA Stock

Seasoned, successful investors typically don’t swing for the fences with their financial trades. They also don’t get caught in the trap of what I call “dividend bribery,” in which low-quality companies will tempt investors with high, unsustainable yields.

Instead, experienced investors tend to focus on rock-solid companies like Mastercard, which has excellent track record of quarterly earnings per share (EPS)-estimate beats. If the company also happens to pay a dividend every quarter, that’s a nice bonus.

They also look for dividend growers, and Mastercard definitely falls into that category. Not long ago, Mastercard announced a 16% hike in its quarterly dividend, from 57 cents to 66 cents per share. And by the way, the company’s board also approved an $11 billion share-repurchase program. This indicates the board’s confidence that MA stock will hold its value.

When all is said and done, Mastercard’s 0.54% forward annual dividend yield isn’t outlandishly high, but it’s consistent and reliable. Besides, the payout ratio for this dividend yield is quite low at 14.55%, meaning that Mastercard doesn’t have to dig deep into its earnings to pay out those quarterly distributions.

Mastercard Says the Consumer ‘Showed Up’ During the Holidays

In 2023’s third quarter, Mastercard’s total revenue grew 14% year over year (YOY) to $6.5 billion, and the company’s GAAP EPS increased 31%. Yet, the real test for Mastercard wasn’t the third quarter but the all-important fourth-quarter holiday shopping season.

Unfortunately, Mastercard hasn’t released its fourth-quarter 2023 financial results yet. However, the company did publish its Mastercard SpendingPulse data for Nov. 1 through Dec. 24, 2023.

“This holiday season, the consumer showed up, spending in a deliberate manner,” remarked Michelle Meyer, chief economist at Mastercard Economics Institute. That’s a reasonable conclusion, as online retail sales increased 6.3% YOY during the specified period.

This, more or less, seems consistent with Adobe’s (NASDAQ:ADBE) findings that online spending increased 4.9% YOY from Nov. 1, 2023 to Dec. 31, 2023. No matter how you slice it, American shoppers remained resilient and shopped online despite inflationary pressures.

Mastercard found that online shopping outpaced spending at physical stores, but that shouldn’t be a problem for the company. After all, Mastercard generates revenue from interest and fees irrespective of where or how shoppers shop. As long as Americans are spending and using credit, Mastercard can make plenty of money.

Mastercard Stock: A ‘Forever’ Stock for Just About Everyone

Mastercard checks all of the boxes for safety-seeking investors. By putting Mastercard stock in your portfolio, you’ll get reliable dividend distributions and exposure to a financial sector giant.

So, don’t give in to the temptations of moonshot promises and dividend bribery. Ideal for practically anyone, MA stock is the ultimate “slow but steady wins the race” investment for 2024.

On the date of publication, David Moadel 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.

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