The Zacks Analyst Blog Highlights: Visa, MasterCard, American Express and Heartland Payment Systems
CHICAGO, Oct. 27, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Visa Inc. (NYSE:V-Free Report), MasterCard Inc. (NYSE:MA-Free Report), American Express Co. (NYSE:AXP-Free Report) and Heartland Payment Systems Inc. (NYSE:HPY-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Friday's Analyst Blog:
Visa Ups Dividend 20% Pre-Earnings
A week before the scheduled fourth-quarter fiscal 2014 earnings, the board of Visa Inc. (NYSE:V-Free Report) hiked its regular quarterly dividend to 48 cents per share, up 20% from the prior payout of 40 cents.
The new dividend will be paid on Dec 2, 2014 to shareholders of record on Nov 14. This brings the annual dividend to $1.92 per share from $1.60 paid until last quarter. Following the announcement, the share price of this electronic card processing giant climbed 1.6% and closed at $214.28. Moreover, the raised annual dividend generates a dividend yield of 0.9%, up from the previous payout yield of 0.7%.
The last dividend increase of 21.2% was declared in Oct 2013, marking the 5th straight annual dividend increment. Visa had earlier lifted its dividend payouts by 19%, 20%, 47% and 50% respectively each year from fiscal 2009-end to fiscal 2012-end.
Sturdy Financials Ease Out Risks
Visa is focused on improving fundamentals and operating leverage through strategic acquisitions and alliances, proactive market expansion and product diversification initiatives. Moreover, the company's steadily improving liquidity has been supporting efficient capital deployment. Its strong operating cash flow of $5.41 billion in the first nine months of fiscal 2014, against $977 million in the year-ago period, also reflects a healthy working capital position.
Additionally, with free cash flow of $4.52 billion and no long-term debt at the end of third-quarter fiscal 2014, the projection of free cash flow of about $5 billion for fiscal 2014 appears quite sustainable and scope-driven to prop up the company's growth initiatives, share buybacks and dividend payouts.
Alongside, of the share buybacks worth $5 billion sanctioned in Oct 2013, only $1.9 billion was available at Jun 2014-end. We expect new authorizations with the release of Visa's fourth-quarter fiscal 2014 earnings, after the closing bell on Oct 29.
Peer Pressure?
Many of Visa's peers have increased their dividends in the recent past.
In Dec 2013, MasterCard Inc. (NYSE:MA-Free Report) had hiked its dividend by 83%, prior to which the payout had increased by 100% each in the February of 2013 and 2012. Another close rival, American Express Co. (NYSE:AXP-Free Report) had raised its dividend payout by 13% in May this year, marking the third hike since 2007. Additionally, this company distributed about 89% of its capital via share buybacks and dividends during third-quarter 2014.
Meanwhile, Heartland Payment Systems Inc. (NYSE:HPY-Free Report) upped its dividend by 21.4% in Feb 2014. Notably, incremental payouts across the industry also reflect the latter's overall adequate financial strength and brighten prospects.
Currently, Visa carries a Zacks Rank #3 (Hold).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
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