MasterCard Rewards Shareholders With 16% Dividend Hike

Ushering in good news for shareholders, MasterCard Inc. (NYSE:MA) declared quarterly cash dividend of 22 cents per share, reflecting a 16% increase from the previous payout. Based on yesterday’s closing price of $102.00, the stock reflects a dividend yield of 0.86% (annualized basis).

The new dividend will be paid on Feb 9, 2017 to holders of record of Class A common stock and Class B common stock as of Jan 9, 2017.

Also, the Purchase, NY-based payment processing giant announced a share buyback program to repurchase up to $4 billion of its Class A common stock. The company noted that the new share repurchase will be effective on completion of its previously announced $4 billion share repurchase program. Currently, the company has around $1.3 billion remaining under the previous authorization.

The latest move certainly reaffirms MasterCard’s commitment toward enhancing shareholders value through steady capital deployment activities. During the nine months ended Sep 2016, the company repurchased 26.3 million shares and paid dividends of $630 million.

MasterCard’s sound financial position also supports its growth through inorganic routes. Notably, in Jul 2016, MasterCard inked a deal to acquire 92.4% stake of London-based Vocalink Holdings Limited, which operates major payments technology platforms for the UK payment schemes. This acquisition is expected to close in mid 2017.

As of Sep 30, 2016, MasterCard’s cash and cash equivalents were $5.2 billion.

MasterCard’s shares have gained 4.7% year to date, outperforming the 4% increase recorded in the Zacks categorized Financial Transaction Services industry. The company remains well positioned for growth on the back of its solid market position, ongoing expansion and digital initiatives and significant opportunities from the secular shift toward electronic payments. Given its progress on the fundamentals, the stock should keep performing well in the quarters ahead.

MasterCard currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

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Vantiv, Inc. (NYSE:VNTV) : Over the last 60 days, the Zacks Consensus Estimate for the current year advanced 1.2% to $2.57. The company carries a Zacks Rank # 2.

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