Investors have many opportunities to increase the return on their investment. People can pour their money into tech and financial stocks, but what about companies that thrive in both of those areas?
Many fintech stocks are far off their 2021 highs. For instance, SoFi (NASDAQ:SOFI) once traded at $25/share in 2021. Shares now trade below $10/share. Declining stock prices present buying opportunities for companies that remain financially sound.
Smaller fintech companies are riskier but can generate higher returns. Investors can also consider less risky plays in the industry. If you are interested in fintech stocks, you may want to consider these three companies.
Visa (V)
Visa (NYSE:V) is a relatively safe fintech company that delivers steady growth and strong profit margins. Shares trade at a little less now than at its 2021 peak.
Visa is the top credit and debit card issuer in the world. Mastercard (NYSE:MA) holds second place. It’s practically a duopoly that benefits from consumer spending. As people spend money using its cards, Visa will benefit and continue to reward shareholders.
Visa has a low dividend yield that’s a little less than 1%. However, the company has made great strides in its stock buyback program. The company announced it would purchase $25 billion worth of shares as part of a multiyear plan. Visa also raised its dividend by 16% year-over-year.
Healthy profit margins and growth on the top and bottom lines can support more buybacks and dividend hikes in the years to come. Visa is an enticing long-term stock that exposes investors to fintech without the substantial risks that smaller companies present.
Intuit (INTU)
Intuit (NASDAQ:INTU) creates and manages financial software for its customers. Some of the company’s most popular tools include QuickBooks, TurboTax, Credit Karma and Mailchimp. Intuit serves over 100 million users.
Just like Visa, Intuit also offers a very low dividend yield below 1%. However, the company is superb at dividend growth. This year, Intuit raised its quarterly dividend from $0.78 per share to $0.90 per share. That marks a 15.4% year-over-year growth rate, which is normal for the company.
Intuit closed out fiscal year 2023 with 12% year-over-year (YoY) revenue growth. Total revenue for the year was up by 13% YoY. Intuit repurchased $2 billion worth of shares in 2023 and authorized an additional $2.3 billion in stock buybacks. The total authorized funds for stock repurchases stands at $3.8 billion.
Intuit isn’t as flashy as some smaller fintech companies but offers more stability. The company offered guidance projecting 11% to 12% YoY revenue growth in the first quarter of fiscal year 2024.
Block (SQ)
Block (NYSE:SQ) is a riskier fintech company compared to the other two on this list. However, it still isn’t the riskiest investment in the industry.
SQ gave investors plenty to cheer about with a strong showing in the third quarter. The company achieved 24.3% YoY revenue growth and beat expectations on top and bottom-line growth. Square also announced a $1 billion stock buyback.
The forecast for full-year operating income jumped from $25 million to between $205 and $225 million. Those numbers indicate the company is righting the ship and can go back to rewarding shareholders instead of hurting them.
For the past few years, Block has been a tough stock to hold. Shares are down by 20% year-to-date and have fallen by 27% over the past five years. That 5-year stretch includes a few run-ups that brought the stock close to $300/share.
The company recently announced it will cut about 1,000 jobs. Those efforts can indicate a slowing business, but as many companies demonstrated this year, it can also strengthen the balance sheets without a material impact on revenue growth. SQ is a riskier stock, but momentum can quickly carry this stock if the company picks up a string of small wins.
On the date of publication, Marc Guberti did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
