With the S&P 500 trading at historically high valuations, a defensive growth play could be one of the smartest additions to your portfolio. These are the kind of stocks that let you sleep well, even during uncertain times, and generate big returns over time.
Visa (V 1.41%) is one such safe stock to own, thanks to a dominant market position, rock-solid financials, a resilient business model that consistently delivers, and strong growth catalysts.
Image source: Visa.
Visa's incredible growth story
Visa has delivered stupendous revenue, earnings, and cash-flow growth over the years, and that's been reflected in its share price. A regular dividend further adds to Visa stock's value.
Here's a chart showing Visa's growth over the past 10 years and the returns its stock has generated during the period, including total returns with reinvested dividends.
Visa is one of the largest payment-processing companies in the world with over 4.7 billion credentials, which are the total number of its payment instruments in circulation, such as co-branded credit and debit cards, prepaid cards, and digital wallets. Each time someone swipes a card to transact anywhere in the world, Visa earns a fee for authorizing, clearing, authenticating, securing, and settling transactions. It also earns income from cross-border payments and value-added services, such as advisory and risk management.
An asset-light business model and a vast global presence creates powerful network effects for Visa, leading to higher margins and profits. The company processed over 300 billion transactions totaling a staggering $16 trillion in volume last fiscal year.
Those numbers should only grow higher for two reasons. First, Visa's consumer card payments business has a lot of potential as e-commerce grows and more economies go cashless. Second, Visa's innovative technologies and expansion into commercial payments, money transfers, and more value-added services should drive growth. Add it all up, and Visa could be the safest stock you'll ever own.
