Following a better-than-expected 2012 financial results, last
) announced higher yield to its shareholders through share
buybacks and dividend increment. This further raised investors'
confidence in this Zacks Rank #3 (Hold) stock.
Accordingly, MasterCard declared a 100% hike in quarterly
dividend of 30 cents per share to 60 cents. The increased
dividend will be payable on May 9, 2013 to shareholders of record
as on Apr 9, 2013. Based on 124 million shares outstanding at the
end of Jan 2013, the company should be able to return about $75
million to its shareholders through dividends.
The latest hike takes the annual dividend to $2.40 per share
from the previous $1.20 a share. This aggregates to a dividend
yield of 0.46%, based on Monday's closing price of $520.85, up
from the prior yield of 0.23%.
Adding to the wealth of its shareholders, the board of
MasterCard also sanctioned a new share repurchase program worth
$2.0 billion, which will be effective once the buybacks under the
previous program worth $1.5 billion, announced in Jun 2012, is
completed. Overall, the company bought back 4.1 million shares
worth $1.7 billion in 2012. As of Jan 25, MasterCard had $440
million of stock available for buybacks under the prior
The decision to amplify the shareholders' return was supported
by the company's increased cash flow in 2012 along with its
ability to generate higher cash flow and earnings in 2013 as
well. MasterCard's operating cash flow improved 9.8% over 2011 to
$2.95 billion in 2012.
With no long-term debt and modest growth in expense amid
better pricing, increased number of processed transactions and
strong gross dollar value (GDV) growth, we believe that the
company is well-fortified to accelerate growth from the improving
card industry dynamics in 2013, primarily through expansion in
the developing economies. This also justifies MasterCard's aim of
returning higher value from the stock.
Last week, MasterCard reported fourth-quarter 2012 operating
earnings per share of $4.86, which modestly beat the Zacks
Consensus Estimate of $4.79 and the year-ago quarter's earnings
of $4.03. Operating net income for the reported quarter stood at
$605 million, up 17.7% from $514 million in the prior-year
quarter. Operating net income also increased 15.5% to $2.77
billion in 2012 from $2.40 billion in 2011.
Simultaneously, last week close peer -
), a Zacks Rank #2 (Buy) stock - sanctioned a new share
repurchase program worth $1.75 billion, which is set to expire by
Jan 2014. In Oct 2012, Visa also hiked its dividend by 50%.
Hence, the recent expansion in MasterCard's capital deployment is
also in concurrence with maintaining its market position and
Other strong performers in the financial transaction services
Heartland Payment Systems Inc.
Total System Services Inc.
), both of which carry a Zacks Rank #2 (Buy).
HEARTLAND PAYMT (HPY): Free Stock Analysis
MASTERCARD INC (MA): Free Stock Analysis
TOTAL SYS SVC (TSS): Free Stock Analysis
VISA INC-A (V): Free Stock Analysis Report
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