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Visa & Mastercard: Strong Growth and Dividend Hike Opportunities?

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Popular free stock trading app Robinhood announced today that it is launching checking and savings accounts. These accounts will not only feature the fee-free, zero-minimum standards that Robinhood users have come to expect, but also 3% interest rates on deposits. That return is roughly 30 times the national average.

For Robinhood, the move is another disruptive entrance to a legacy segment of the finance business. But it’s also interesting to note the involvement of Mastercard (MA - Free Report) , which will service the debit cards used for the accounts. Mastercard’s involvement is either insignificant—or another sign that the traditional payments business is ready to evolve with the times.

Mastercard rival Visa (V - Free Report) has also been busy modernizing its business. The payments behemoth partners with PayPal (PYPL - Free Report) and European online payments company Klarna, and just today, it announced a new relationship with Ingo Money, a firm looking to speed up the check cashing and Automated Clearing House processes.

With these initiatives in focus, Zacks Income Investor editor Ryan McQueeney was curious as to what Visa and Mastercard have to offer investors focused on growth and dividends. In today’s video, Ryan explores these opportunities.

V and MA present relatively small dividend yields at just 0.7% and 0.5%, respectively. But both companies have a strong track record of raising their payouts. Visa has recorded five-year annualized dividend growth of 19%, while Mastercard sports a staggering 30% growth record in that metric. Moreover, Visa and Mastercard are on track to post remarkable earnings and revenue growth over the next few years.

For Visa’s current fiscal year ending September 2019, the company is expected to notch improvements of respective improvements of 11% and 15% on the top and bottom lines, according to our Zacks Consensus Estimates. Those growth rates are currently projected to come in even hotter in the following fiscal year.

Mastercard is also an impressive growth option. The firm is expected to finish 2018 with EPS growth in excess of 40% on revenue growth of nearly 19.5%. From there, the bottom line is projected to improve another 17% on an additional 13% in revenue growth in 2019, based on our current consensus estimates.

It’s clear that Visa and Mastercard are comparably exciting growth and income picks. Make sure to check out today’s video for more info!

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