MasterCard Incorporated: A Classic Toll Road Moat
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| MasterCard Inc. (MA) Dividend Stock Analysis 2017 |
Toll roads. I hate paying the tolls, but they sure do make driving quicker and easier. However, businesses that are built on the toll bridge moat are typically cash cows that generate plenty of excess cash that can be returned to shareholders and make for ideal investments when purchased at sound valuations.
MasterCard's (NYSE:MA) business model is simple. Create a payment network. Get a large number of users, card holders, to use your cards. Get businesses to accept your payment network. Rake in profits. It's not quite that simple, but it's not much more complex than that.
The global payment processing market is largely a duopoly with Visa (NYSE:V) and MasterCard taking up the lion's share of all transactions. Around the globe the trend is for more transactions every year to be done without cash or checks. In my own life I can honestly say that I write about 3 checks per year with essentially every other purchase being made with my cards.
Dividend History
One of the first places that I go to determine the quality of a company is its dividend history. The dividend history gives quick insight into whether the company is growing as well as generating excess cash to send to shareholders.
Mastercard & Visa for sure are dividend growth stocks. I should have got them @ a lower price :-(
ReplyDeleteI agree. MasterCard and Visa are truly buy and hold.
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