Visa Inc (NYSE:V)’s business model is quite insulated from the current economic crises going on around the world. It’s earnings are protected from many side effects of macro-economic policies such as inflation due to the fact that Visa collects a percentage of every transaction – not a fixed amount. A second hedge from economic turbulence is the fact that Visa Inc (NYSE:V) does not lend consumers any money in their business dealings and the company is not responsible for any non-payment by its customers. This protects Visa from any falters in consumer credit.
The current high growth phase Visa Inc (NYSE:V) faces offers them the opportunity to put a lot of money in its shareholder’s pockets. Its three-year dividend growth rate is 31%, with plenty of room for further increases.
A Company That Provides For Almost Every Need Of Life
Nestlé is the world’s largest food conglomerate. It makes everything from candy, to frozen foods, to cosmetics, to dog food. Just take a glance below, and you will get an idea of how immense this company really is:
Is what is arguably the world’s most extensive consumer goods supplier not the ideal way to capture the growth of a new middle class in emerging markets? Emerging markets currently make up 45% of Nestlé’s sales. This number is expected by management to increase in time. As of its first quarter 2013 presentation, emerging markets saw organic growth of 8.4% from a year ago.
A handful of Nestlé brands are the “best in class” brands of the American consumer. This trend is being mirrored in emerging markets as management reports in its most recent presentation that market share is firming up in almost all categories ranging from Nestlé bottled waters to Nestlé pet care products.
Over the last decade, the company has grown earnings per share by 7.6%, and dividends by 12.5%. With this blue-chip-packed portfolio that includes 29 (!) billion-dollar brands, you will have a hard time finding a more stable income provider.
The bottom line:
The rise of a middle class in emerging markets presents an opportunity to investors. The consumer market is growing globally by 200,000 customers a day. We as consumers will continue to feed ourselves and our children, to wash ourselves, and to feed our pets. We will continue to wear make up, and to increase our credit card spending. Iconic brands of our past will be the foundation for our future. These companies are prime examples of opportunity to be found as the rest of the world embarks on its own version of the “American Dream.”
The article The Best Way to Play the Rise of the “Middle Class” in Emerging Markets originally appeared on Fool.com and is written by Justin Pope.
Justin Pope has no position in any stocks mentioned. The Motley Fool recommends Coca-Cola and Visa. Justin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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