Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



MasterCard's New Capital Plan: The Good, the Neutral, and the Ugly

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

MasterCard (NYSE: MA  ) was up 3.5% on Wednesday after the payment card company announced a three-action capital plan that includes a 10-for-1 stock split, an 83% increase in the quarterly dividend, and a new $3.5 billion stock buyback authorization. Was the "pop" warranted?

There is no doubt the plan demonstrates management's confidence in the company's prospects and those of the industry, more broadly. In fact, the news had a similarly positive effect on shares of MasterCard's larger competitor and new Dow component Visa (NYSE: V  ) , which gained 3.1% on Wednesday, achieving fresh all-time highs. Both stocks have outperformed the S&P 500 (SNPINDEX: ^GSPC  ) this year, although MasterCard is the standout on that front, having risen 61% through Friday.

In the following video, Fool contributor Alex Dumortier argues that the capital plan may not be all it's cracked up to be and that the new share buyback program, in particular, raises questions regarding management's skill in terms of capital allocation.

MasterCard smashed the S&P 500 this year; here's the one stock to own for 2014
There's a huge difference between a good stock, and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (1) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2765558, ~/Articles/ArticleHandler.aspx, 10/1/2016 6:29:08 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 9 hours ago Sponsored by:
DOW 18,308.15 164.70 0.91%
S&P 500 2,168.27 17.14 0.80%
NASD 5,312.00 42.85 0.81%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/30/2016 5:01 PM
^GSPC $2168.27 Up +17.14 +0.80%
S&P 500 INDEX CAPS Rating: No stars
MA $101.77 Up +1.16 +1.15%
MasterCard CAPS Rating: *****
V $82.70 Up +0.78 +0.95%
Visa CAPS Rating: *****