The financial technology or fintech sector looks promising this year. Fintech companies use technology to offer money management solutions. They try to make banking, investing, and borrowing easier, and their relevance has grown with technological advances. Several dividend-paying fintech stocks have emerged as strong industry players with solid upside momentum.
The industry’s future looks bright, and a rate cut could help the stock rally. As we transition towards digital payments, these three companies are set to make the most of it. At the same time, they are similar businesses and trying to build their league. To add to the sweetness, these stocks also pay dividends. Hence, if you seek capital growth and passive income, here are three hot fintech stocks to add to your portfolio.
Visa (V)
A top fintech stock, I have been pounding the table on Visa (NYSE:V) for a while now. The company caters to 100 million merchants and has 4 billion cards in circulation. We all have at least one car. We all have at least one top fou,r card issuer. Visa earns a fee whenever we swipe the card to pay for a purchase. This is how it makes money and keeps the operating costs low.
In the recently announced quarterly results, Visa saw a steady 10% rise in net revenue to $8.9 billion, and processed transactions saw a 10% year-over-year jump. Its business metrics remained stable, with a 7% YOY jump in payments volume and a 14% jump in cross-border volume.
Net income for the quarter was $2.40 per share, a 20% rise. It was a rare revenue miss for the company, driven by low consumer spending in the lower-income segment. However, Visa is a long-term play worth holding on to for years.
As we transition from cash and increase card usage, Visa will benefit. V stock has dropped 6% this week due to the revenue miss. Trading at $254, it is moving closer to the 52-week low of $227. The stock has a dividend yield of 0.82% and has increased dividend payouts for 15 consecutive years. Visa is a buy in the dip.
American Express (AXP)
While all three dividend-paying fintech stocks mentioned here are somewhat similar, American Express (NYSE:AXP) is slightly different. It is a credit card company that can issue its cards, while the other two companies will issue cards that link to a bank, such as Standard Chartered or Barclays. American Express has successfully attracted new users; about 60% of the new accounts were opened by Gen Z and Millennials.
The company recently announced results and missed revenue estimates for the quarter. It reported revenue of $16.33 billion, up 9% year over year, and an EPS of $3.49. Having reported better-than-expected profit, management raised the full-year profit expectations, aiming for $13.30 and $13.80 per share.
Trading at $240, the stock is up 27% YTD and 44% in the past 12 months. Compared to the other two companies mentioned here, American Express had an excellent 2024. Its dividend yield of 1.16% is also the highest among the three companies we discuss here.
The company has enough liquidity to hike dividends in the coming quarters and has increased dividends for three consecutive years. Earlier this year, it announced a 17% dividend hike. A lot is working in favor of American Express, and I believe it is one of the best financial stocks to own.
Mastercard (MA)
Visa’s rival Mastercard (NYSE:MA) is another card issuer that makes money whenever a card is swiped. This company will benefit from the rise in consumer spending and the shift towards digital payments. MA stock is up 2% YTD and trading for $432 as of writing. It is up 7% in the past 12 months and aims to expand its market share with new offerings.
In the previous quarter, the company saw a 10% YOY rise in net revenue to $6.3 billion, and the cross-border volume saw an 18% rise. The company constantly competes with Visa for customers, and management has expansion plans. It has partnered with the African Development Bank to expand digital access for African individuals and businesses.
The growing preference for digital payments will continue to change consumer spending habits, putting Mastercard in a favorable position in the industry. It could see double-digit top-line growth in the coming years.
While Mastercard trades at almost double the price of Visa, the stock could pay off well if you have a long-term window. It also enjoys a dividend yield of 0.61% and has increased the dividends for 13 consecutive years. Mastercard is a low-risk and reliable stock to add to your portfolio.
On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.