If you look at your bank and a retail store, do you see them as similar or different. If you ask many people they would say they are different, but although the bank tends to have more of its own software, they also use the software of other companies. The easy example is Mastercard and VISA. For many years, banks could issue one or the other now they can issue both. Recently an article by David Berman examined the company Fiserv. If you are a normal person, you likely have not heard of the company because it sells all its products to financial institutions like banks.
50 plus years ago, everyone paid cash only a few used credit cards. Then consumers had credit cards and the next logical step was payment with no cash or from your bank account. Companies that provide credit cards, develop financial technology and facilitate mobile payments have been rewarding investors for years.
Over the past 5 years, VISA delivered a return (with dividends) of 162%. Mastercard was 194%. PayPal Holdings is up 157% since it left the parent company of eBay Inc; and Square is up 734% since its IPO in November 2015.
Another company to look at is Fiserv Inc on Feb 17, 2009 the stock was at $8.44 on Feb 15, 2019 the stock reached 85.78 or a return of 872.84% over 10 years.
Fiserv is based in Wisconsin and processes debit and credit card transactions, electronic bill payments and offer image check clearing, and its many services. The company works with banks, insurance companies, and credit unions and has 12,000 clients. A few weeks ago, Fiserv bought First Data Corp of Atlanta which makes point-of-sale terminals and provides e-commerce services and gift cards for merchants. The cost of merging is $22 billion.
Over the past 5 years the share price has risen 3 fold which is better than Mastercard and VISA. Analysts expect the stock to reach into the 90s this year.
Linking to dividend paying stocks, when you adjust your thinking you can see even more opportunities. In the case of the banks, they use external services just like many other retail stores. Doing you homework allows you to determine who supplies the banks you have a habit of making money and paying dividends. By seeing who the supplier is, you can find more than one way to invest in the company.
There are more questions than answers, till the next time – to raising questions.