This Dow dividend growth stock delivered record results, raising its dividend to an all-time high. This is the reason why we are buying so much in November.

visa (V 0.31%) The stock price hit a new intraday high on October 31, just two days after the financial services giant announced significant results for the fourth quarter and full year of 2024. of Dow Jones Industrial Average Components have been winning over the long term, but underperforming. S&P500 So far this year.

Here’s why Visa stands out to me as a high-conviction Dow stock to buy in November, and why the company’s fiscal year 2024 has been a memorable one.

Visa continues to grow despite challenges

Visa has really grown over the last few years. At a time when many consumer companies were underperforming, the company’s sales and bottom line continued to grow. True, its growth has slowed down a bit. However, its strong performance demonstrates the power of the company’s diverse revenue streams, network effects, and ability to acquire new customers.

Visa makes money every time a credit or debit card is swiped, tapped, or processed digitally using its network. Its fee structure is based on the amount paid and the number of transactions processed, so consumers and business customers incur fees even if they spend less.

Many companies point to inflation, rising interest rates, and a complex macroeconomic backdrop as reasons for the decline in consumer discretionary spending. So if there was ever a year for Visa to report weak financial results, it would have been this year. However, total payment volume still increased by 8%, processed transactions increased by 10%, and cross-border transaction volume increased by 15%. These results indicate that Visa’s international business has compensated for slightly changed domestic business and is not simply dependent on increased caseloads. In other words, across the board, customers are spending more and using their Visa cards more frequently.

Network effects refer to platforms and systems that become more valuable the more they are used. The more merchants that accept Visa as a payment method, and the more consumers and businesses that use Visa as their preferred payment method, the stronger our entire network becomes. More users means more revenue for payment processors, which means more cash flow that can be used to strengthen network security, run marketing campaigns and promotions, and win deals with big customers.

Visa updated its largest customers in Latin America, Asia Pacific, Canada, Central Europe, the Middle East and Africa in the fourth quarter of its fiscal year ended Sept. 30. We also expanded our partnerships with US Bank and USAA.

“Across all of our regions and across all of our fintech partners, we have over 650 commercial businesses, from early stage to mature, up 30% from last year,” CEO Ryan McInerney said on the earnings call. We have entered into a partnership.”

Visa’s value-added services revenue grew 22% in fiscal 2024. Value-added services target a digital-first payment experience, streamlining the checkout experience, processing cross-account payments, and more. For example, Visa Alias ​​Directory helps financial institutions, service providers, networks, governments, and businesses protect sensitive information by assigning aliases to linked bank accounts and debit cards to help protect their customers.

Overall, Visa’s annual revenue and diluted earnings per share (EPS) reached all-time highs, and operating margins remained near all-time highs at 67%, with the company achieving both top-line and bottom-line growth. This shows that they are continuing to do well.

V Revenue (annual) Depends on the data Y chart

Visa’s huge capital return program

Visa returned $20.9 billion to shareholders in fiscal 2024, including $16.71 billion in share buybacks and $4.22 billion in dividends. In conjunction with the recent report, the company increased its quarterly dividend by 13% to $0.59 per share. In October 2019, Visa raised its dividend to $0.30. This means the dividend has effectively doubled over the past five years. Due to share buybacks, the number of outstanding shares has decreased by 11.1% over the past five years and by 21.2% over the past 10 years.

The company is able to return so much profit to shareholders because it has a strong balance sheet and generates more profits than it needs to operate and expand its business.

The company ended the fiscal year with $11.98 billion in cash and cash equivalents, $3.2 billion in investment securities and $20.84 billion in long-term debt. Because they have low net debt, they don’t feel pressured to use excess profits to pay down debt, and can instead return excess profits to shareholders.

Visa has a cash cow business model that results in a high quality revenue profile. As the company has proven, it can grow even when macroeconomic factors are against it. It’s a much more predictable business than a company that has to spend a lot of money building cars, drilling for oil, selling shoes, or producing shows and movies.

The following chart shows the impact of high-margin growth combined with share buybacks over time.

Diluted VEPS (annual) Depends on the data Y chart.

Over the past 10 years, Visa’s revenue has increased 159%. However, the company’s network was able to handle more business with minimal increase in operational costs, which further increased its net profit. Even better, diluted EPS grew faster than net income as share buybacks reduced the number of shares. Visa is pulling three levers to increase EPS: artificially through stock buybacks, organically through its own innovation and growth, and inorganically through mergers and acquisitions.

Visa is still very valuable

Despite hovering near record highs, Visa is by no means expensive. The company’s price-to-earnings (P/E) ratio of 29.8x is only slightly higher than the S&P 500’s P/E ratio of 29.1x. Still, its business model and profitability are well above average. S&P500 component.

Visa has proven it can overcome challenges and remains committed to returning capital to shareholders through dividends and share buybacks. It’s one of the best stocks in the Dow and generally stands out as one of the best stocks to buy right now.