What I'm Watching With Western Union To See If They Beat The Market

Western Union (NYSE: WU) has an iconic, trusted name and a business dating back to the mid-1800s. That didn't protect the company from competitors who used the internet to offer lower costs and easier-to-access money transfer services. Since 2020, Western Union's stock has lost roughly two-thirds of its value. But a turning point for the business could be on the horizon.

Western Union has struggled

Wall Street didn't miss any memos; Western Union's revenues have been heading lower for years. There was a slight uptick during the coronavirus pandemic, but demand for its services has clearly been in decline. Earnings, meanwhile, have been volatile.

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One of the biggest problems is that competitors have used the internet to offer competing services. Upstarts often attempt to undercut existing companies on price, siphoning off customers. That has had a predictable impact on Western Union's business. And the increased competition has forced Western Union to invest in improving its own offering to compete with the upstarts.

Western Union is a different company today

A lot of heavy lifting has taken place at the financial services provider. Most notably, Western Union has leaned heavily into modernizing its technology, shifting toward the web while still maintaining its highly visible physical presence. That means it still has wide brand recognition, but now it also has a better ability to take on the start-ups that were pulling its customers away.

However, the bigger story for investors is the company's adjusted operating margin. In the fourth quarter of 2024, Western Union's margin was 17%. It jumped to 19% in the first half of 2025 and then rose to 20% in the second half. Year over year, the company's adjusted operating margin increased three percentage points in the fourth quarter of 2025. That's an early sign that Western Union could be nearing an important inflection point as a business.

Investors are starting to notice Western Union's success

Over the past six months, Western Union's stock price has increased by about 10%. The S&P 500 index (SNPINDEX: ^GSPC) has lost roughly 1% over that same span. With a lofty 10% dividend yield and a turnaround plan that appears to be gaining traction, I'm watching to see if Western Union can keep improving its margins.

That said, Western Union is only appropriate for more aggressive dividend investors. Fourth-quarter earnings more than covered the quarterly dividend, but the turnaround here is still in its early stages.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.