Earlier this month, the Dow Jones Industrial Average temporarily slipped back into bear market territory. It was down as much as 22% at one point, but has recovered somewhat and is currently down around 15.4% as we move into the fourth quarter.

But just because it has recovered a bit from the worst of the lows in 2022 doesn't mean this index of 30 blue-chip businesses no longer has buying opportunities for dividend growth investors. The payments processing company Visa (V 0.33%) appears to be one Dow Jones stock that balances a potential for high dividend growth with a reasonable valuation.

Visa's financials don't sync with its recent stock price dip

Share prices of Visa have fallen 13% year to date. While this is a bit better than the Dow Jones Industrial Average itself, it's still arguably an excessive decline for the payments processor given its financial performance this year. 

Visa's results for its fiscal year that just ended on Sept. 30 won't be released until Tuesday, Oct. 25, but analysts forecast $7.42 in adjusted diluted earnings per share (EPS). That's 25.5% growth compared to a year ago. 

Recession fears may cause some slowing of adjusted EPS growth for the current fiscal year, which is probably the reason for the stock price drop. Surging interest rates and high inflation are expected to pressure consumer spending and travel over the next several quarters. This is why analysts project a slowdown in Visa's adjusted EPS growth to 12.8% for this fiscal year.

The good news for the company is that a near-term slowdown isn't likely to affect long-term growth. As has been the case for many years now, Visa's growth prospects are buoyed by the rise of e-commerce and the shift away from cash to alternative payment methods. These growth catalysts explain why the firm Boston Consulting Group anticipates that the global payments industry will soar from $1.5 trillion in 2021 revenue to $2.9 trillion in revenue by 2030.

As the leading payments industry player, Visa should be a big beneficiary of this global payments growth. Analysts predict 18.5% annual adjusted EPS growth over the next five years for Visa. Those predictions include the aforementioned slowdown in growth for fiscal 2023. 

A customer makes a contactless payment.

Image source: Getty Images.

The dividend has nowhere to go but up

When stacked up against the S&P 500 index's 1.7% dividend yield, Visa's 0.8% yield might not seem like much. Part of the reason for the depressed yield is the outsized stock price growth the company has seen for the past several years. And this uninspiring yield is precisely what makes it such a great option for dividend growth investors.

If Visa's earnings come in around the analyst consensus in the upcoming fourth-quarter report, the company's dividend payout ratio will be just 20%. This leaves plenty of capital for strategic acquisitions, debt reduction, and share repurchases. And this low payout ratio is exactly why I believe Visa's annual dividend growth will remain around the high-teens percentage range over the next 5 to 10 years.

A sensible valuation for a world-class business

Visa's tollbooth business model based on payments dollar volume and processed transactions makes it one of the most stable companies in the world. That's why in an economic environment that will see many businesses experience a temporary decline in earnings, Visa's earnings growth rate will merely decelerate for a brief period.

The company is trading at a forward price-to-earnings (P/E) ratio of just 22.4. Given that Visa is compounding its earnings at nearly 20% each year, this makes the stock an attractive growth pick at a reasonable price for investors.