Solid growth stocks are a must for a long-term investor's portfolio. One of these is a dynamic company with innovative technology, while the other provides a product essential for commerce around the globe. Both produce extreme amounts of cash flow, return a significant chunk to shareholders, and report sales and profits that just seem to rise year after year.
Mastercard enjoys a duopoly in the payment processing industry alongside Visa. These two companies are critical to global commerce, and rumors of their demise have been greatly exaggerated. In fact, Mastercard alone processed $7.7 trillion in gross dollar volume transactions in 2021. This is more than the GDP of every country on the planet besides the U.S. and China.
Much has been made of the threat of buy now, pay later (BNPL) to credit card companies. However, while BNPL may be here to stay, its threat to the credit card giants is overblown. First, Mastercard is introducing its own BNPL platform called Mastercard Installments in the U.S., Australia, and the U.K. With the tremendous resources afforded to Mastercard, it isn't a stretch to believe it can become a significant BNPL player.
There are also several downsides to BNPL. BNPL is generally only offered for relatively small transactions, up to a few hundred dollars. Also, while the transactions may be interest-free, late fees often exceed a typical interest charge. Regulation may curtail the industry as well, with the Consumer Financial Protection Bureau exploring new rules. BNPL may be popular with many consumers, but it isn't likely to dethrone Mastercard and Visa.
Mastercard grew sales 23% in 2021 to almost $19 billion. The company brought in $9.5 billion in cash from operations in 2021 and returned $7.6 billion to shareholders through dividends and stock buybacks. The company is forecasting continued growth that will increase earnings per share 20% or more annually while maintaining a terrific operating margin over 50% through 2024. With the stock currently trading 14% off its 52-week high, this may be an opportune time to pick up shares.
There has never been a bad time for a long-term investor to buy and hold Apple stock. And now is likely no different. Apple reported its all-time best sales quarter in the first quarter of fiscal 2022, and the record-setting pace is set to continue. The iPhone continues to be the company's bread and butter, although each revenue stream showed significant increases in fiscal 2021.
Apple iPhone sales reached $192 billion in fiscal 2021, and the company still has a few tricks up its sleeve to drive revenue. The company is preparing to offer hardware to consumers in exchange for monthly payments. This plan is a huge win-win. It will benefit consumers who can't shell out the cash upfront for a new device and help the company by providing recurring revenue.
Apple produces tons of cash and returns a tremendous amount to its shareholders. It made over $85 billion worth of share repurchases in fiscal 2021 alone, along with $14.5 billion in dividend payments. This trend continued in Q1 2022 when it returned another $27 billion.
Apple stock is currently trading less than 8% off its all-time high; however, this should not discourage investors. Bank of America notes Apple stock ownership among fund managers is now at a record high of over 75%. The pros are betting big on new all-time highs, and long-term investors may be wise to join them.