The Warren Buffett Stock That Has Compounded at 18.5% Annually for 18 Years

Warren Buffett made his legendary investing career by finding, buying, and holding great companies. One example is Visa (NYSE: V), which he first bought for Berkshire Hathaway in 2011.

The stock has compounded at 18.5% since its IPO in 2008, including capital gains and dividends reinvested, for a total of nearly 2,300%. It has outperformed the S&P 500 by more than 3-to-1 over that time.

Visa's sustained excellence sets a very high bar, so it's worth checking whether the stock can still deliver such strong long-term returns for your portfolio.

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Visa is the world's largest payment processing network and has benefited tremendously from a decades-long shift from cash to debit and credit cards. Visa functions like a toll operator, charging fees to securely and reliably connect a merchant's payment terminal to a consumer's financial institution.

Countering the laws of large numbers

Statista estimates that global digital payments could hit $26.9 trillion this year. But Visa has become a behemoth, with $14.2 trillion in total payment volume in 2025. Growing by 10% means $1.4 trillion in new payment volume on its network. It's tough to sustain growth with numbers this large.

To counter that, Visa is looking beyond its traditional payment rails for growth. Value-added services have been a success. These include payment tools, card issuing solutions, banking services, fraud management, and data analytics. Visa's value-added services were $3 billion in the fourth quarter of 2025, accounting for almost 30% of net revenue and growing by 25% year over year.

Since Visa's swipe fees are primarily percentage-based, payment volume can continue to rise as inflation pushes prices and transaction values higher over time. That sets a natural floor under Visa's growth, even if transaction activity slows. Stablecoins could become a wildcard, but it's still very early, and Visa and other incumbents are already moving to integrate them into existing payment networks.

Past returns probably aren't in the cards, but that's OK

Investors may not see 18.5% annualized total returns moving forward. Wall Street analysts estimate Visa will grow earnings by 12% to 13% annually over the long term. Add a 0.9% dividend yield, and the stock's annualized total returns land in the 13% to 14% range.

The stock currently trades at 28 times earnings, notably below its historical average of 34.5, but again, Visa is so big that growth will naturally slow a bit. A lower valuation reflects a more mature business.

Visa is one of the most dominant companies on Earth. Mathematically, compounding at 13% to 14% still makes you very wealthy over a decade or two. As long as investors temper their expectations to assume the current valuation as the new normal, the stock's future performance should make shareholders quite happy.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway and Visa. The Motley Fool has a disclosure policy.