Fidelity National Information Services (FIS): Why This Tech Firm Is a Compelling Investment

Better yet, most banks use multiple products and services from FIS, and contracts for each tend to expire at different times. Because many of these products are complex in nature, and are integrated with other products and services, banks have an inherent incentive to keep working with FIS. If you’re an avid user of Apple products, then you know exactly how sticky a good ecosystem can become.

Returning capital to shareholders
With its acquisition needs now greatly reduced, FIS can start returning even more cash to shareholders through buybacks and dividends. FIS increased its payout ratio — the percentage of net income it paid in dividends — by 400% last year. It also reduced its total diluted share count by more than 15% in the past two years, all while reducing its overall debt. Taken together, this is a clear indication of just how confident management is with FIS’s future prospects.

Foolish bottom line
Like most Foolish favorites, anyone who invests in this stock must take a long-term view. Earnings fell 30% last quarter due to debt refinancing and information security costs, and the stock promptly sold off by 2.8%. But one tough quarter doesn’t mean that the overall story for this company is no longer intact. The top line is still growing, while the debt refinancing can be interpreted as a long-term positive. And it appears as though there is no shortage of long-term investors who believe in FIS’s future: The stock is up almost 6% since its July 30 sell-off.

JP Bennett has no position in any stocks mentioned, and neither does The Motley Fool.

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