- Latest dividend jumps 15.8% to $0.66 per share
- On track for 2023 payout above consensus hopes
- Unveils new $11 billion share buyback scheme
Credit cards colossus Mastercard (MA:NYSE) hiked its third quarter shareholders dividend by 15.8% and plans a new $11 billion share buyback scheme.
The raise, from $0.57 per share to $0.66, is a statement of intent that the New York-based business plans to use its enormous financial clout to continue its long history of fantastic shareholder returns. Mastercard has averaged returns on equity and capital employed of 125% and 48% respectively over the past five years.
OOZING HIGH QUALITY
The global credit and debit card monster oozes high-quality, sustainable growth, and some of the most respected fund managers in the world agree. Terry Smith-founded Fundsmith Equity (B41YBW7) bought a stake last year, although it is not one of the fund’s top 10 holdings currently.
Why Mastercard is a great stock for investors young and old
It does appear in the leading stakes of the Blue Whale Growth Fund (BD6PG78), while legendary investor Warren Buffett owns a rough $1.6 billion stake through Berkshire Hathaway (BRK:NYSE).
While the third quarter payout goes ex-dividend on 8 January 2024 and won’t get paid until February, the scale of the rise signals an acceleration of dividends this year compared to consensus expectations.
Annual dividend payouts rose 10% and 11.4% in 2021 and 2022 respectively, with analyst consensus for 2023 of $2.19 implying 11.7% growth.
PAYOUT ABOVE CONSENSUS?
Based on this latest dividend, investors could be handed $2.46 per share of dividends for fiscal year 2023, which would be more than 12% above current expectations, albeit implying a modest income yield of 0.6%.
The new buyback programme will kick-off once the existing $9 billion share repurchase scheme is complete. As of 1 December 2023, about $3.5 billion remains available for repurchase.
Disclaimer: The author of the article (Steven Frazer) owns a personal investment in Fundsmith Equity and Blue Whale Growth
