Personal Finance

Better Buy: Visa Inc. vs. American Express

AXP Price to Book Value Chart

Call it the Battle of the Plastic Behemoths. Visa (NYSE: V) and American Express (NYSE: AXP) are -- along with MasterCard -- the world's biggest payment card companies. If there's a credit card or debit card in your wallet, odds are good that one of them is processing your transactions. But between these two financial services monsters -- Visa and Amex -- which is the better stock to buy for your portfolio right now?

AXP Price to Book Value Chart

AXP Price to Book Value data by YCharts

Although Visa is expected to grow its business more significantly, AmEx is still the cheaper stock on a P/E to anticipated growth basis at a ratio of 0.61 versus Visa's 0.77. (The higher the number, the more expensive the shares; typically, stocks priced above 1.0 are considered to be overvalued, while those below represent bargains).

Finally, there are dividends to consider. Thanks to the rise in its stock price, Visa's annual $0.66 per share payout only yields 0.8% these days. That's barely enough to get an income investor out of bed.

Meanwhile, AmEx's distribution yields 1.9%. That's no great shakes when compared to the 2.1% average of dividend-paying stocks on the S&P 500 index, but it's miles better than Visa's.

Both companies are performing well, regardless of the market's current sentiments. But AmEx is a recovery story that is yet to be fully told, while Visa's current and future success is largely priced into its stock. And the former is more generous with its payout.

So for me, AmEx is the preferable investment just now.

A secret billion-dollar stock opportunity

The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

Eric Volkman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Costco Wholesale, MasterCard, and Visa. The Motley Fool recommends American Express. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics


The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More