Payments giant Mastercard (MA) is enhancing its shareholder value with a 15% dividend increase and a new $12 billion stock buyback program. This decision reflects the company’s strong financial position and optimism about its future growth prospects.
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The new share repurchase program will commence upon the completion of the company’s existing $11 billion program. As of December 13, approximately $3.9 billion remains available under the current buyback program.
Additionally, the company approved a quarterly cash dividend of 76 cents per share, representing a 15% increase over the previous dividend. Interestingly, this marked the 13th consecutive year of dividend increase. The new dividend will be paid on February 7, 2025, to shareholders of record as of January 9, 2025.
MA’s Strong Cash Position Supports These Plans
Interestingly, these capital deployment plans are supported by Mastercard’s strong cash flows. As of September 30, MA’s cash reserves totaled $13 billion, compared with $8.7 billion in the previous year. This growth can be attributed to the strong demand for Mastercard’s services and healthy consumer spending habits.
Investors should note that the company is making efforts to improve its services with investments in technology, such as AI and data analytics. Additionally, MA is actively diversifying its business model by acquiring AI-driven companies such as Recorded Future, a cybersecurity services provider, and Minna Technologies, a subscription management firm.
Is MA Stock a Buy, Sell, or Hold?
Turning to Wall Street, MA stock has a Strong Buy consensus rating based on 22 Buys and two Holds assigned in the last three months. At $574.11, the average Mastercard price target implies an 8.12% upside potential. Shares of the company have gained 25.22% year-to-date.
