Mastercard: High Quality, But Valuation Leaves Little Margin For Error
Mastercard (MA) stumbled a bit during 2020 as the COVID-19 pandemic ground much of the global economy to a halt at some point during the year. While that hurt results in the short term, as Mastercard's revenues declined 9% and free cash flow declined 13%, to say it was a rough year would be an understatement.
However, Mastercard is still poised to continue growing over time as global payments networks continue to grow and develop. While the short-term was difficult, 2020 could easily push more people to use their cards even more as a means to reduce possible transmission across physical money.
In my opinion 2020 was just a blip on the longer term transition towards cashless payments. I was finally able to initiate a position in Mastercard in 2020 as the share price fell as fears began to take over.
Now that things have normalized a bit, and the stock market is firing all cylinders over the last 15 months, I wanted to take a look at Mastercard and update my valuation.
When I began my investing journey nearly 10 years ago I decided that the dividend growth strategy was the one I wanted to implement. At its core the strategy is quite simple: identify good businesses with a history of paying and raising their dividend payment over time.