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Source: Flickr user Steven Depolo.

To state that dividends are a critical component of any long-term-focused investment portfolio might still be understating their importance. As ABC News' Susanna Kim noted in 2012, dividend yield and dividend growth were responsible for 90% of the S&P 500's nominal return for investors between 1910 and 2010.

But, just because there are some 1,900 dividend-paying companies with a market value over $300 million doesn't mean all of them offer a smart way to put extra income in your wallet. In fact, a vast number of dividends checks aren't worth the paper they're printed on, either because the dividend itself is minuscule, the dividend isn't sustainable, or the business model is in jeopardy. The only way to truly establish whether a dividend passes the test is to dig below the surface, beyond just a company's yield, and analyze the growth, value, and sustainability of the both the business and the payout.

The financial industry, for example, is ripe with high-yield dividends, but they aren't always your best bet for long-term sustainability. On the flipside to that equation payment processing facilitators Visa (NYSE:V) and MasterCard (NYSE:MA) are sporting relatively small yields, but could have decades to further grow their payout. Today, we'll more closely examine these two dividend juggernauts of the future and determine which is truly the better dividend stock for investors.

Growth
Despite being about as steady as they come, both Visa and MasterCard find themselves down year-to-date, while the S&P 500 has actually moved higher.

What's responsible for the move lower you wonder? It could actually be a number of factors, though leading the list would be tensions between Russia and the rest of the world, especially Europe and the United States. Russia's annexation of Crimea has led to a bounty of sanctions from the U.S. and Europe that could eventually cripple its economic growth opportunities. In response, Russia gave Visa and MasterCard, which derive 3%-4% and 2%, respectively, of their total revenue from Russia , a take-it-or-leave-it deal. Investors are clearly concerned that Russia or additional emerging market nations could decide to cut Visa or MasterCard out of their future payment scheme and keep those processing profits for themselves.

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Source: Covered California.

Ultimately, though, both companies have a lot to offer investors on the growth side of the equation. In its third-quarter results Visa delivered 12% payments volume growth to $1.1 trillion on a constant dollar basis, while cross-border volume (i.e., ex-U.S. transactions) jumped a more modest 7%. Not surprisingly, processed transactions also grew by 11% to 16.7 billion.

MasterCard also delivered impressive second-quarter results, with its processed transactions improving 12% to 10.6 billion, gross dollar volume rising 13% to $1.1 trillion, and cross-border volume jumping 16%.

While I'd suggest investors could reasonably consider both companies excellent long-term buy-and-hold stocks based on their growth projections, I'm going to give the edge to MasterCard based on two factors. First, MasterCard's emerging market growth rate is a bit higher than Visa, which could potentially give it an edge when it comes to boosting its dividend over the long run. Also, while Visa has the lead prepaid debit-card market share in the U.S., and thus the profits that go along with that share, there's always the risk of increased prepaid debit-card legislation on the table which could dampen its outlook. Thus, in my mind MasterCard is the slightly better growth story between the two payment processors.

Value
In addition to establishing that a dividend stock is growing its sales and profits, dividend-seeking investors also want to feel as if they're getting good value for their money. Let's have a closer look at some of the more pertinent financial metrics between Visa and MasterCard to determine if one company stands out as the "value buy" between the two.

Company

Forward P/E

PEG Ratio

Profit Margin (TTM)

Return on Equity (TTM)

Net Cash/Debt

Visa

20.4

1.4

44.7%

20.5%

$4.1 billion

MasterCard

20.9

1.5

37.1%

49.5%

$4.2 billion

Source: Yahoo! Finance. TTM = Trailing 12 months.

If you were hoping for some degree of separation in this category, you may want to think again. If we've learned anything about payment facilitators Visa and MasterCard it's that they tend to trade very much in-line with one another. As you can see from the above, Visa has a minuscule edge when it comes to PEG ratio, forward P/E and profit margin, while MasterCard has slightly more net cash and a significantly better return on equity over the trailing-12-month period. Yet, to proclaim that one is a better value than the other based on these metrics would be nothing more than a coin toss. With that being said I'm awarding a tie to this category.

Credit Cards Axp

Source: Pixabay user Republica.

Sustainability
Lastly, dividend stocks need to be able to tie everything together and not only demonstrate good value and growth now, but the ability to deliver that growth 10, 20, or even 30 years from now. The most valuable dividend gains are those built over the long term, so it's important for investors to hone in on both dividend and business model sustainability.

The good news here is it would appear that investors on both sides of the coin are in good shape. What makes Visa's and MasterCard's business model sustainable is the simple fact that 85% of the world's transactions are still being conducted in cash. This means there's decades worth of emerging market growth opportunities in Asia, the Middle East, and Africa which are yet untapped.

Additionally, both Visa and MasterCard have been growing their relatively young dividends at a rapid rate. As you can see below, Visa's boosted its payout by 281% since it introduced a dividend in 2008, while MasterCard's dividend has skyrocketed by a split-adjusted 1,344% since first paying out a dividend in 2006! With Visa paying out 15% of earnings in the form of a dividend and MasterCard divvying out just 12% there's plenty of room for improvement.

V Dividend Chart

V Dividend data by YCharts

Once again, there's no clear-cut winner in the sustainability category.

The better dividend stock is...
When push comes to shove Visa and MasterCard are extremely similar to one another in terms of valuation and sustainability. However, Visa's higher exposure to additional prepaid debit card legislation, as well as its modestly lower overseas growth rate leads me to believe that MasterCard is the better dividend stock between the two.

At the moment Visa's yield of 0.8% does stand slightly atop of MasterCard's at 0.6%, but MasterCard has also been able to grow its dividend at a quicker rate, and is paying out slightly less of its earnings than Visa, meaning it has more potential to raise its dividend over time. I, for one, would prefer to see both MasterCard and Visa focus less on share buybacks and more on dividends, but it's tough to argue with the management team of both companies considering how successful both stocks have been since they went public.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool owns shares of, and recommends MasterCard and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.