2 Payment Stocks to Buy and Hold That Raised Their Dividends 14% in Their Latest Increases

When Visa (NYSE: V) increased its dividend in the fourth quarter of 2025, it jumped by a huge 14% (techically 13.559%). Mastercard (NYSE: MA) last increased its dividend in the first quarter of 2026, raising it by just over 14%. The historical growth rate of inflation is around 3% to 4%, and even though inflation is running hot right now, a 14% dividend increase still means the buying power of your dividends continues to grow.

Here's why Visa and Mastercard are doing so well. And why they are likely to continue doing well for years to come.

Image source: Getty Images.

Cash is slowly being replaced

Visa and Mastercard are competitors, both doing the same basic thing. Simply put, they allow consumers to buy things by connecting sellers to the financial institutions that issue credit and debit cards. Those cards have the Visa and Mastercard logos and are accepted worldwide. At this point, it would be difficult for a business to operate without accepting card payments.

Indeed, cash is being replaced by card payments. Cards are easier for consumers to handle and allow people access to revolving credit. Yes, the bills have to be paid at the end of the month, but in the meantime, consumers can keep spending even if they don't have the cash on hand. But there's an important nuance here: financial institutions, such as banks, that issue credit cards assume the financial risk that a monthly bill won't be paid, while Visa and Mastercard do not.

Visa and Mastercard collect a small fee for each transaction they process. But the numbers add up quickly. For example, in the fiscal third quarter of 2026, Visa processed 71.7 billion transactions, 10% higher than the same quarter of 2025. And to give an idea of the scale of these businesses, Mastercard noted that it had 3.7 billion cards branded with its logo worldwide at the end of June, 2026.

Demand for Visa and Mastercard's services is growing

Cards are replacing cash because they provide convenience. So the trend is likely to continue. In fact, there are trends that make having a credit card mandatory, such as the growth of e-commerce. You can't use cash if you buy something online. But there's more to this story, because Visa and Mastercard are also providing security.

These payment stocks provide technology that protects both buyers and sellers from scams. That is an increasingly important piece of the growth story, as advances in technology allow increasingly sophisticated scammers to take advantage of people. Fighting against that threat is an ongoing effort for Visa and Mastercard, and their efforts save customers (both card issuers and users) the hassle of trying to keep ahead of this risk on their own.

There's a reason why Visa's adjusted earnings rose an impressive 11% in the fiscal third quarter of 2026. Mastercard's adjusted earnings rose an even more impressive 21% in the comparable calendar quarter. And while a recession will likely lead to fewer transactions, which would put pressure on earnings, consumers can't stop buying necessities, so Visa and Mastercard are likely to be highly resilient to downturns relative to the financial institutions that issue cards.

Visa and Mastercard are reasonably priced growth stocks

It would be difficult to describe either Visa or Mastercard as cheap, since both have price-to-earnings ratios that are around 31x. However, given the long history of growth here and the strong prospects for future growth, a premium valuation appears reasonable. That said, Visa's P/E is roughly in line with its five-year average P/E, while Mastercard's P/E is actually a bit below its five-year average.

In other words, if you are a growth investor, these stocks appear reasonably priced from a historical perspective. They could be worth a close look right now, particularly if you are worried about an economic downturn.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Mastercard and Visa. The Motley Fool has a disclosure policy.