Discover Financial (DFS): Just forget about Visa and Mastercard
This smaller credit card company ranks higher based on yield, dividend growth and buybacks
Discover Financial Services: Crazy dividend growth and buybacks
The second focus stock published on dividendhike.substack.com is Discover Financial Services (DFS), a renowned financial services company with a storied history and a robust presence in the credit card and banking industries.
Everybody seems to love the giants Visa and Mastercard, but actually Discover Financial, a 2024 dividend hero (more on this later….), has way better stats if we look at the dividend and buybacks. Discover Financial hiked its dividend by 16.7% in 2023, marking 13 consecutive years of increases. This compares to a 15.8% hike by Mastercard (MA) last year and a 15.6% increase by Visa (V) in 2023.
Moreover Discover Financial, trading near its all time high, has a 2.3% dividend yield vs. 0.8% for Visa and 0.6% for Mastercard. We can continue with valuation stats, all in favour of Discover Financial with an estimated p/e of 13 based on Today’s closing price of $130.81.
Last but not least we look at buybacks with DFS retiring about 47% of its shares in the last decade vs. 21.5% for Mastercard and 21.1% for Visa. Both Visa and Mastercard repurchased 2.5% of its shares in 2023 vs. 8.5% for Discover Financial. So together with a better yield and dividend growth DFS also ranks higher based on buybacks.