This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

3 Stocks With Ever-Increasing Dividends

MasterCard

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

Credit card issuer MasterCard ( MA) really saw its business take off since the middle of the last decade. As it expanded its global reach, revenue shot up from $3.3 billion at the end of 2006 to $6.7 billion at the end of 2011. Still, the divided was stuck at 60 cents a share annually throughout the growth phase. Management thought it wise to preserve most of the cash flow to help fuel that international sales growth.

>>5 Big Trades for a Ping-Pong Market

These days, MasterCard is settling into a more mature phase, as revenue grew around 10% in 2012 (to $7.4 billion) and is expected to rise at a similar pace in 2013 and 2014. Yet even as the top line matures, this is still a remarkable bottom-line story. MasterCard's profit margins are already quite robust and growing higher still, thanks to a largely automated business model when additional incremental revenues flow quickly to the bottom line. Prior to last year, Master Card never earned more than $15 a share in its history before 2010. Now the company is on track to earn $25 a share this year and perhaps $30 a share next year, according to consensus forecasts.

Management has already responded by doubling the dividend to $1.20 a share in 2012 and doubling it again in 2013 to $2.40 a share. Guess what? That dividend is bound to double again, if not in 2014 then soon thereafter. Frankly, Mastercard's profits are now so robust that we may be looking at a $10 a share dividend by the end of the decade, especially as this company's cash is piling up so fast (recently exceeding $5 billion) and it carries no debt. Soon management will have almost no need to retain profits, at which point the dividend could be sharply hiked.

3 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,156.85 +24.88 0.15%
S&P 500 2,001.57 +2.59 0.13%
NASDAQ 4,562.1890 +9.43 0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs