American Express Company (AXP), Visa Inc (V) & Mastercard Inc (MA): The Best Card Company For Investors Now

MasterCard – international market focus and digital wallet deployment

MasterCard offers the lowest dividend yield of the trio, at only 0.4%. Mastercard Inc (NYSE:MA) has been focusing on expanding its business internationally. In 2012, MasterCard generated nearly $3.65 trillion in gross dollar volume (GDV), with the international market contributing as much as $2.48 trillion. Compared to 2011, the U.S. GDV increased 9% while the GDV in the international market experienced a double-digit growth of 14%.

Recently, Mastercard Inc (NYSE:MA) launched the new MasterPass platform, letting users store their card information into a software program, which could be utilized to make payments. Interestingly, cardholders could even load their information for both debit and credit cards from other brands including American Express Company (NYSE:AXP) and Visa Inc (NYSE:V).

While MasterCard has the digital wallet MasterPass, Visa has V.me, which already has the support of more than 50 banks. In the beginning of February, MasterCard doubled its quarterly dividend to $0.60 per share and announced a new repurchase plan of up to $2 billion worth of shares. Mastercard Inc (NYSE:MA) is trading at $553 per share with a total market cap of $67.9 billion. Thus, the new buyback plan would create an additional yield of nearly 3% for MasterCard’s shareholders.

Among the three, American Express Company (NYSE:AXP) is the cheapest valued at only 13 times its forward earnings. While MasterCard has a higher valuation at more than 18.3 times its forward earnings, Visa Inc (NYSE:V) is the most expensively valued of the trio, at 19.8 times EV/EBITDA.

My Foolish take

Visa Inc (NYSE:V) seems to deserve the highest valuation with its global market leading position in the global card transaction market. Quantitatively, among the three, I like American Express Company (NYSE:AXP) the most due to its lowest valuation and highest dividend yield of 1.2%. Furthermore, the potential buyback would generate a juicy additional yield of 5.6%. Personally, I think it could fit well in the portfolios of patient investors.

The article The Best Card Company for Investors Now originally appeared on Fool.com.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.