5. The Western Union Company (NYSE:WU)
Number of Hedge Fund Holders: 29
Dividend Yield as of May 28: 7.37%
The Western Union Company (NYSE:WU) is a Colorado-based financial services company that mainly specializes in payment services. The company seems to be in a favorable position to experience growth as immigration rates increase and globalization advances. In the first quarter of 2024, the company reported a 6% year-over-year growth in revenue of its Consumer Money Transfer segment. In addition, its transactions also increased by 6% from the same period last year. The stock is currently trading at approximately 8 times its earnings over the past year, which is cheap for the company with stable cash flows and solid dividend yield. The stock declined by over 9% in the fourth quarter of 2023 due to various macroeconomic challenges. Ariel Investments highlighted some reasons for the stock’s drop during the quarter in its Q4 2023 investor letter.
“Global leader in money transfer services, The Western Union Company (NYSE:WU), traded lower in the period, despite the delivery of solid earnings and a subsequent raise in full year guidance. These results were aided by regulatory change in Iraq and margin expansion in the retail business. Meanwhile, management continues to make progress executing on its Evolve 2025 Strategy and continues to return capital to shareholders through dividends and share repurchases. Although the company anticipates the macroeconomic environment will continue to slow, it reminded investors remittances have proved resilient in prior periods of economic contraction. At current levels, WU is trading at a discount to our estimate of private market value.”
That said, the stock has bounced back since then and has gained 4.70% in 2024 so far. Western Union faces intense competition from fintech companies like PayPal, Square, and others that offer faster, cheaper, and more convenient digital payment solutions. The rise of blockchain and cryptocurrency-based transfer services also poses a significant threat to traditional money transfer businesses. While we acknowledge the allure of Western Union to dividend investors, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
On May 17, The Western Union Company (NYSE:WU) declared a quarterly dividend of $0.235 per share, which was in line with its previous dividend. It is one of the best dividend stocks on our list as the company has been paying regular dividends to shareholders since 2006. The stock’s dividend yield on May 28 came in at 7.37%.
As of the end of March 2024, 29 hedge funds tracked by Insider Monkey held stakes in The Western Union Company (NYSE:WU), down from 30 in the preceding quarter. The total value of these stakes is over $418.2 million. Ken Griffin was one of the company’s leading stakeholders in Q1, increasing his position in the company by 169%.