The global economy rests on the shoulders of the financial services sector. Trillions of dollars are circulating among the world's consumers, businesses, and markets at any given moment.
It's an excellent place to find fantastic businesses that have proven they can generate exceptional investment returns while paying dividends in the process. Dividends and steady growth can be a potent combination that builds substantial wealth over time.
But things don't happen overnight. Building your portfolio of dividend stocks one brick at a time is the tried-and-true method. So, here are three awesome dividend-paying financial stocks you can buy in October and hold for the long term.
Image source: The Motley Fool.
1. Visa
Leading payment processing network Visa (V 0.02%) is among a select few companies that dominate its industry. It charges fees in exchange for facilitating payments on its network. These fees typically represent a percentage of the transaction, so the company's fee revenue increases as prices rise and drive transaction values higher.
Visa's network is mature and highly profitable at its current size, and the business has continued to grow over time as people shift to non-cash payment methods. Visa has paid and raised its dividend for 16 consecutive years, and its low payout ratio, just 20% of 2025 earnings estimates, leaves plentiful room for future increases.
Analysts estimate that Visa will grow its earnings by approximately 13% annually over the next three to five years. I wouldn't call Visa a bargain at 27 times 2025 earnings estimates, but that's a very fair valuation to justify buying such a high-quality business today.
2. S&P Global
Investors across the financial sector rely heavily on S&P Global (SPGI -0.73%) for its data and analytics to inform their decisions. That includes the bond market, where S&P Global is one of the primary authorities. It grades corporate debt, similar to how credit scores indicate the likelihood of consumers to fulfill their financial obligations.
S&P Global is a highly profitable business, as its business model primarily relies on intangible factors, including the company's reputation and in-house data. The company has converted over a third of its trailing-12-month revenue into free cash flow, making it a robust dividend payer. The company has paid and raised its dividend for 51 consecutive years.
Investors can likely count on growth for as long as governments and corporations borrow. Analysts anticipate S&P Global's earnings will grow by an average of 11% annually over the next three to five years. The stock's forward P/E ratio of 28 is reasonable for a business as profitable as this, with double-digit earnings growth likely ahead.
3. Jack Henry & Associates
Outside of the very most prominent financial institutions, banks typically lack the means to deliver the technological features that people have come to expect in their modern banking. Jack Henry & Associates (JKHY 0.72%) offers a range of software and services to help small and medium-sized banks compete with the megabanks that can create their own products and systems.
A bank's daily operations depend on these products, so switching to another provider is difficult, expensive, and often carries a learning curve among the bank's employees. Therefore, Jack Henry & Associates enjoys sticky, profitable revenue that has made the company a fantastic dividend stock. The company has paid and raised its dividend for 34 consecutive years.
Jack Henry & Associates faces a shrinking domestic customer base due to mergers, but the continuous launch of various products and services is sufficient to foster steady long-term growth. Analysts expect the company to produce 9% annualized earnings growth over the next three to five years. Investors can buy the stock at a price-to-earnings ratio (P/E) of 24, which is well below its average over the past decade.
