Credit card issuer Mastercard Incorporated (MA) has announced a further raise in its shareholder dividend payments and a new share repurchase program.
According to Mastercard, the latest dividend would rise by 10 percent to $ 0.44 per share. For shareholders as of January 8, payments are expected to begin on February 9. The yield is 0.53 percent at the present share price. A high dividend yield was never given by Mastercard. The advantage of the corporation however is a daily rise in payments. Mastercard has been raising the number of dividends on a regular basis for many years: since 2015, payments have risen from $0.16 per share to the current level.
In addition, Mastercard is launching a new share buyback program of $6 billion. This will be a continuation of the original $8 billion share buyback initiative, half of which has been launched to date.
The business model for Mastercard does not include offering loans to its payment card holders, which eliminates the risks associated with mass loan defaults. This ensures that as many cardholders lose their income and jobs in the current economy and cannot pay off their debt, the business is reasonably safe. At the same time the general recession in the global economy is a more serious concern, leading to a decline in consumer spending and, subsequently, non-cash transactions. The collapse of the tourism industry and the entertainment sector has also been a significant blow. Mastercard reported a 14 percent decrease in sales and a 27 percent drop in non-GAAP net income in the third quarter.
In the long term, as the economy is expected to recover after the beginning of mass vaccination, Mastercard will return to large transaction volumes.
Mastercard Incorporated (MA) was down -1.75 percent to $334.37 on Monday, but was up roughly 12 percent since start of the year.