Visa (V +0.84%) has traditionally generated revenue primarily by facilitating electronic funds transfers worldwide. It earns transaction fees when people use branded credit, debit, and prepaid cards. With the rise of mobile payments, there's been speculation about the viability of Visa's business model.
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Though there might be changes in how Visa operates and profits from add-on services, Visa, with its market cap of more than $500 billion, is still poised for growth in the future. In this article, we'll walk you through the basics of investing in Visa stock.
How to buy Visa stock
You can't purchase Visa shares directly from the company through a direct stock purchase plan, but you can easily buy Visa shares through an online brokerage. You can also gain exposure to Visa stock by buying exchange-traded funds (ETFs) or financial contracts related to the performance of Visa stock. Here's how to buy Visa stock:
Step 1: Open a brokerage account
The first step is to find a platform that will enable you to invest in Visa stock. In most cases, the easiest way to buy stock in a publicly traded company is through an online broker. Here's what to look for when you choose a broker:
- Commission-free trades: Many brokers offer commission-free trading, which can save you money on each transaction.
- Low or no minimum deposit: Many brokers have eliminated their minimum deposit requirement, making investing easier for everyone.
- User-friendly platform: Choose a brokerage with a platform that is easy to use and navigate.
- Research tools and resources: Access to educational resources, stock analysis tools, and customer support can be very helpful, especially for new investors.
Step 2: Figure out your budget
There are several factors to consider when you make a budget for investing in Visa. These include your current financial situation, time frame, and risk profile. If you're using advanced strategies like options and derivatives, consider your potential exposure to further downside risk.
Even with blue chip stocks like Visa, you need to make sure your investments won't affect other facets of your life if they turn south.
A common rule of thumb is to diversify your investments and make sure you don't have all your eggs in one basket. Consider investing in a mix of industries and stocks with different risk profiles.
Also, think about whether you're investing for long-term growth or short-term gains. Long-term investors may be less concerned with daily price fluctuations and more focused on Visa's potential to grow.
Step 3: Do research
With any investment, knowledge is power, and the more data you can gather and fit into your brain, the more prepared you are. Here are some steps to take:
- Take the macro view. Industry analysis is crucial. Long-term investors should consider the climate for consumer finance stocks as a whole. For example, China is completely dominated by mobile payment platforms such as WeChat and Alipay. If the United States and other countries where Visa operates also adopt mobile payments en masse, what effect will this have on the credit card industry as a whole, and where does Visa fit into all of this?
- Understand how Visa makes money. Visa generates revenue primarily through transaction fees when consumers and businesses use its payment network. Unlike banks, Visa does not issue cards or extend credit; instead, it processes payments for financial institutions and earns fees from each transaction.
- Know when Visa performs well and when it doesn't. Visa tends to perform well when consumer spending is high, since more transactions lead to increased revenue. Economic growth, rising consumer confidence, and increased adoption of digital payments all contribute to Visa's strong performance. Additionally, Visa benefits from global trends such as the shift toward cashless transactions and e-commerce growth.
- Identify potential risks. While Visa is considered a stable blue chip stock, it is not without risks. Factors such as economic downturns, regulatory changes, and increased competition from alternative payment platforms can impact its performance. For instance, if mobile payment platforms like WeChat and Alipay gain significant market share in regions where Visa operates, it could affect Visa's revenue.
- Analyze Visa's financial health. Look at Visa's financial statements to understand its revenue growth, profit margins, debt levels, and cash reserves. Key metrics like revenue growth and profit margins can provide insights into the company's overall health and future prospects. Comparing Visa's current valuation using ratios such as price-to-earnings (P/E) and price-to-sales (P/S) against its historical averages and industry peers can help determine if the stock is overvalued or undervalued.
Step 4: Place an order
Once you've opened your brokerage account, made a budget, and done your due diligence, it's time to place an order. But you'll still need to decide what type of order to place. Below are examples of different types of stock orders.
Order Type | Explanation |
|---|---|
Market orders | Executed immediately at the current market price. |
Limit orders | Set a specific price limit; the order is executed only if the stock can be bought or sold at that price or better. |
Stop orders | When a specific price threshold is reached, the order becomes a market order and is executed at the best available price. |
Stop-limit orders | Combines features of stop and limit orders. When the stop price is reached, the order becomes a limit order rather than a market order. |
Should I invest in Visa stock?
Deciding whether to invest in Visa stock depends on your personal circumstances and investment strategy. Here are some key points to consider:
When you might consider investing in Visa:
- You are looking for long-term growth potential. If you're looking for a stable investment with the potential for steady growth over time, Visa's position as a blue chip stock and its role in the global payments industry make it a strong candidate. Visa has a track record of consistent revenue and profit growth, driven by increasing global adoption of electronic payments.
- You want diversification. As a major player in the financial sector, Visa provides exposure to the consumer finance and payment processing industries. This can help balance your portfolio if you're invested in other sectors like technology or healthcare.
- You crave low volatility. Visa is included in several major index funds and ETFs, which can help reduce portfolio volatility. If you prefer investments that offer more stability and less price fluctuation, Visa stock could be a fit.
Exchange-Traded Fund (ETF)
When you might avoid investing in Visa:
- You are a short-term investor looking for short-term gains. As a blue chip stock, it tends to have less dramatic price swings compared to more volatile stocks, meaning the potential for rapid gains (or losses) is lower.
- You have a high risk tolerance. If you have a high risk tolerance and are looking for investments with the potential for significant short-term gains, you might prefer more volatile stocks or financial products like options and derivatives. Visa's steady performance might not align with your risk appetite.
- You're into something more niche. If you're interested in emerging sectors or companies at an earlier stage of growth, Visa's mature market position might not fit your investment profile.
Is Visa profitable?
Visa is delivering strong earnings in the first quarter of 2025, reporting $9.5 billion in planned revenue, a 10% increase compared to the previous year. For the quarter ending last year, Visa processed 63.8 billion transactions, reflecting 11% year-over-year growth.
Visa's earnings per share (EPS) continued to rise, with GAAP EPS increasing to $11.02 in the latest fiscal year, up from $8.28 the previous year. The non-GAAP (adjusted) EPS, which accounts for one-time gains and costs, climbed to $11.45, compared to $8.77 in the prior year, showing that Visa has been performing exceptionally.
Does Visa pay a dividend?
Visa pays a dividend with a forward yield of approximately 0.67%. Visa's annual dividend has grown more than fivefold in the past decade.
ETFs with exposure to Visa
Many ETFs and index funds track a specific index. Some ETFs with significant Visa holdings include S&P 500 ETFs and technology and financial sector ETFs.
ETF Ticker | ETF Name | Exposure to Visa | Category | Expense Ratio |
|---|---|---|---|---|
IYG | iShares U.S. Financial Services ETF | 9.40% | Financials Equities | 0.39% |
XLF | Financial Select Sector SPDR Fund | 8.37% | Financials Equities | 0.09% |
IYJ | iShares U.S. Industrials ETF | 7.98% | Financials Equities | 0.39% |
FNCL | Fidelity MSCI Financials Index ETF | 7.03% | Financials Equities | 0.08% |
IPAY | Amplify Digital Payments ETF | 6.89% | Technology Equities | 0.75% |
Will Visa's stock split?
Visa's stock split in 2015, with a 4-to-1 split. However, there is no indication that Visa will appear on the stock-split calendar in the near future. Stock splits are triggered by a variety of factors, such as market conditions and the company's stock performance, none of which indicate Visa's stock will split.
Related investing topics
The bottom line on Visa
Like any investment, buying or selling Visa stock should be done in conjunction with many other analyses, such as valuation metrics and market sentiment. However, as a blue chip stock, Visa is considered to be less volatile and is thus a favorite of various name-brand ETFs and more long-term-minded investors.
