Conservative investors don't want to get in a position where
they have outlived their money.
So even dividend investors should have some quality growth
stocks in their portfolio. Growth stocks usually don't offer big
dividend yields, but they add more potential for capital
) certainly qualifies as a
. The big-cap stock has five things working in its favor and only
one working against it. Let's go through the items:
: MasterCard doubled the quarterly dividend payout this year and
last year -- from 15 cents a share to 30 cents a share to 60
cents a share. Yet, the stock doesn't offer a juicy dividend
yield. The annualized yield is 0.5%.
: The five-year earnings Stability Factor is 5 and the three-year
factor is 2. The scale runs from 0 (calm) to 99 (wild). The
Stability Factor measures the degree of variation around an
earnings trend line.
: Earnings growth in the past three years was 24% in 2010, then
33% and last year 18%. While that's not quite elite status, it is
much better than average. Europe, where MasterCard has exposure,
has hurt earnings. If the problems in Europe recede, look for
MasterCard to benefit.
: This stock attracts support across many investing approaches.
Everybody from Warren Buffett'sBerkshire Hathaway (BRKA) (which
has held its stake steady in the past five quarters) to Will
Danoff's Fidelity Contrafund (which added to its position in the
fourth quarter) has a stake in MasterCard.
: Return on equity, a measure of financial efficiency, was 43%
last year. Research shows elite stocks have an ROE of 17% or
more. Pretax margin last year was a stunning 53.5% -- up for an
eighth consecutive year.
The negative on MasterCard is found on the chart. The stock is
the fourth week of a tight consolidation above the 10-week moving
average. The pattern could turn into a second base on base. For
now, the potential buy point appears to be 535.45.
The problem is the base count, which would be third stage. A
third-stage pattern is more likely to fail than an early stage