Mastercard (MA) Okays Dividend Hike, Unveils $9B Buyback Program
In a bid to boost shareholder value, Mastercard Incorporated’s MA Board of Directors recently sanctioned a 16% rise in the quarterly cash dividend. Therefore, the latest payout stands at 57 cents per share compared with the prior payout of 49 cents.
This year reflects the ninth consecutive year of dividend increase. The increased dividend will be paid out on Feb 9, 2023 to shareholders of record as of Jan 9, 2023. Prior to the recent dividend hike, Mastercard had sanctioned a hike of 11% in its quarterly dividend in November 2021.
MA has grown its dividend at a nine-year CAGR of 20.1%. It has also been a regular dividend-paying company since 2006. Based on the stock’s Dec 6 closing price of $347.53, the new dividend will yield 0.6% to the company.
In addition to resorting to annual dividend hikes, Mastercard also engages in regular share buybacks. As a testimony to this fact and concurrent with the 16% dividend hike, the company unveiled a new share repurchase program, before the exhaustion of the entire amount in the current buyback program.
The new program equips Mastercard to buy back Class A common shares of up to $9 billion.
The new program will come into effect once the prevailing share buyback program, which had around $4.1 billion left in it as of Dec 1, 2022, is concluded.
Sustaining its history of prudent capital deployment, Mastercard continues to remain quite active on this front this year as well. In the first nine months of 2022, MA bought back 18.3 million shares worth $6.3 billion. It also paid dividends worth $1.4 billion to shareholders in the same time frame.
Another indicator demonstrating Mastercard’s efficiency in utilizing shareholders’ funds remains its return on equity figure. The metric stood at 148.9% as of Sep 30, 2022, way higher than the industry’s average of 37.5%.
The robust financial position of Mastercard is reflected by its uninterrupted dividend payments and pursuit of regular share buybacks. A strong financial stand is derived from growing cash reserves and sufficient cash-generating abilities. As of Sep 30, 2022, MA’s cash and cash equivalents improved 2.9% from the 2021-end level. Additionally, it generated operating cash flow of $8.1 billion in the first nine months of 2022, which grew 29% from the prior-year comparable period.
Shares of Mastercard have gained 1.5% in a year against the industry’s 15.4% decline.
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Zacks Rank & Key Picks
Mastercard currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Business Services space are Barrett Business Services, Inc. BBSI, Clean Harbors, Inc. CLH and Trane Technologies plc TT. While Barrett Business Services sports a Zacks Rank #1 (Strong Buy), Clean Harbors and Trane Technologies carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Barrett Business Services outpaced estimates in each of the last four quarters, the average being 49.05%. The Zacks Consensus Estimate for BBSI’s 2022 earnings suggests an improvement of 31% from the year-ago reported figure. The same for revenues suggests growth of 12.5% from the year-ago actual. The consensus mark for BBSI’s 2022 earnings has moved 4% north in the past 60 days.
Clean Harbors’ earnings outpaced estimates in each of the trailing four quarters, the average being 38.20%. The Zacks Consensus Estimate for CLH’s 2022 earnings suggests an improvement of 99.5% from the year-ago reported figure. The same for revenues suggests growth of 35% from the year-ago actual. The consensus mark for CLH’s 2022 earnings has moved 7.1% north in the past 60 days.
The bottom line of Trane Technologies outpaced estimates in each of the last four quarters, the average being 6.44%. The Zacks Consensus Estimate for TT’s 2022 earnings suggests an improvement of 17.7% from the year-ago reported figure. The same for revenues suggests growth of 12.2% from the year-ago actual. The consensus mark for TT’s 2022 earnings has moved 0.8% north in the past 60 days.
Shares of Barrett Business Services and Clean Harbors have gained 38.9% and 14%, respectively, in a year. However, the Trane Technologies stock has lost 14% in the same time frame.
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