fcafotodigital
Summary
- Focusing on high dividend growth over a high starting yield can lead to higher returns in the long run.
- Mastercard and Visa operate in an oligopoly and have wide moats, very profitable businesses with mid-double-digit EPS growth expectations, making them attractive investments.
- Both companies offer low dividend yields but have double-digit dividend growth rates that are expected to continue eventually compounding.
- While high-quality businesses are rarely on sale, both Mastercard and Visa are currently trading at a discount to their 5-year averages.
- I like both companies, but let me show you why I think one will deliver superior returns over the other.
As a decade-long dividend growth investor, I always enjoy writing about wide-moat dividend growth companies that are reshaping the way we live and have long growth potential ahead of them because they operate in growing markets.
Yet, as I am ‘only’ in my 30s, I always prefer high dividend growth over high starting yield in most cases. That is why I never look at the dividend yield as a starting criterion for my investments, and I am open to investing in a company with, let’s say, a 1% dividend yield.
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