With interest rates likely to remain unchanged for the remainder of the year, dividend-paying stocks are still investors' best income vehicles.
Discover Financial Services has 20.8 million merchant locations, making it a leading global direct bank and electronic-payment-services company. Its direct bank operates the company's flagship credit card business, the Discover Card, and offers an array of banking products including certificates of deposit, personal loans, prepaid cards and private student loans.
As the world adopts more cashless transactions, Discover Financial Services has the infrastructure in place to profit from this long-term trend. The company's payments businesses, Discover Network, PULSE ATM/Debit and Diners Club International, together process billions of transactions a year in credit, debit and prepaid markets worldwide.
As the economy recovered and business started to improve after the 2008 crisis, Discover Financial Services launched an aggressive program to hike its dividend and buy back shares.
The company said that it would raise the dividend 42% and buy back $2.4 billion in shares, about 10% of the company's total market cap.
Discover has paid a dividend since 2007 and, more impressively, never stopped paying it when the financial crisis hit. In fact Discover Financial Services has increased its annual dividend by 35% per year on average over the last five years.
Trading at a low multiple of just 9.3 times forward earnings, Discover Financial Services also offers a dividend yield of 2.1%.