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Sunday's Bonus Story Why Mastercard and Visa Are the Definition of Forever StocksSubmitted by Jordan Chussler. Article Published: 3/14/2026. 
Key Points - The financials sector has lagged the S&P 500 this year, but two payment processing giants continue to deliver the kind of margins and earnings consistency that define long-term holdings.
- Despite recent sector-wide struggles, Visa and Mastercard function as a veritable duopoly, controlling over 90% of payments outside of China.
- Visa hasn't missed on earnings in 10 years, while Mastercard has secured 21 consecutive quarterly beats.
- Special Report: Elon Musk's $1 Quadrillion AI IPO
After finishing the past two years with an average annual gain of nearly 23%, the financials sector has struggled this year. With a year-to-date loss of around 9%, the sector ranks last among the S&P 500's 11 sectors. But zooming out, the companies that comprise the sector have proven to be key components of buy-and-hold investors' portfolios. A $1.5 trillion valuation. That is what industry experts are projecting for the highly anticipated SpaceX IPO, expected to be announced on April 20th — potentially surpassing the combined market caps of the six largest U.S. defense contractors. Consider what Tesla's IPO meant for early investors: a $50,000 position held for 10 years grew to $1.5 million. The SpaceX IPO is projected to be even larger. Before April 20th, there is still a backdoor way to secure a pre-IPO stake in SpaceX. Here is how to get positioned. Claim Your Pre-IPO Position As high-quality growth stocks become harder to find, two legacy companies in the global payment processing and digital payments markets continue to deliver profit margins that qualify them as true "forever stocks." Why Digital Payment and Payment Processors Make for Good Forever Stocks These companies historically have enjoyed higher profit margins than many other industries because of their high-volume demand, ease of automation, and technology-driven models that translate into low marginal costs per transaction. The industry is also poised for strong growth. According to Grand View Research, the global payment processing solutions market, valued at nearly $48 billion in 2022, is projected to grow at a compound annual growth rate (CAGR) of 14.5% through 2030, reaching nearly $140 billion. Grand View also forecasts the digital payment market, valued at more than $114 billion in 2024, will expand at a 21.4% CAGR through 2030, reaching more than $361 billion. Despite that strong growth and attractive margins, two of the largest players still operate in a near-duopoly, controlling more than 90% of credit card and digital payments processed outside of China. With roots dating back to the mid-1900s, these firms control much of the payment infrastructure, which helps them set fees, limit competition, and sustain strong margins. While companies such as Block, with its peer-to-peer service Cash App, and PayPal (NASDAQ: PYPL), with its popular Venmo platform, have sought to disrupt the space, two industry stalwarts remain the clearest candidates for "forever stock" status. Mastercard: The $450 Billion Market Cap Company Focusing on Tech Integration Since Michael Miebach became CEO of Mastercard (NYSE: MA) in 2021, management has focused on expanding tech platforms, supporting cross-border commerce, and developing services that reduce fraud, streamline payment flows, and help clients leverage payments data for insights. Those efforts helped Mastercard post record revenue and net income in 2025. Revenue of nearly $33 billion represented a year-over-year (YOY) increase of more than 16%, while net income of nearly $15 billion also rose by more than 16% YOY. That profitability was driven in large part by an effectively 100% gross margin in 2025, enabled by tech integrations and a minimal cost of goods sold—resulting in quarterly gross profit that closely matched quarterly net revenue. For investors, that has translated into consistently strong earnings. The last time Mastercard missed on earnings was Q3 2020 following the onset of the COVID-19 pandemic; since then the company has recorded 21 consecutive quarterly earnings beats. Most recently, Mastercard reported Q4 2025 EPS of $4.76, a nearly 25% YOY increase versus the same quarter a year earlier. Analysts expect earnings to grow by roughly 17% in the year ahead, from $15.91 to $18.61 per share. At the same time, Mastercard has been shifting from a traditional payments network toward an AI-driven, software-focused company that emphasizes enhanced security, simpler B2B transactions with virtual cards, and agentic AI tools. Icing the cake, Mastercard pays a dividend—noted more for consistency than yield (currently about 0.69%)—and has increased its payout for 13 consecutive years. The company maintains a sustainable dividend payout ratio of roughly 21%, and an annualized five-year dividend growth rate of about 13.7%. Visa: Evolving and Adapting Since 1958 Visa (NYSE: V) operates a network-based model that lets partner banks and financial institutions issue branded payment products while Visa focuses on infrastructure, standards, and technology integration. Like Mastercard, Visa is rapidly integrating fintech innovations, focusing on AI-driven solutions and blockchain-based settlement as it shifts from traditional card-based transactions to more flexible, digital-first experiences. That strategy helped Visa report record revenue and net income in 2025, with revenue of about $40 billion (an 11% YOY increase) and net income near $20 billion. Visa's consistency is notable: the company has not missed earnings in the past 10 years. Over that stretch it met analyst expectations twice and beat EPS estimates 38 times. Much of Visa's performance stems from its roughly 83% gross profit margin in 2025, which aligns with its long-term average. Like Mastercard, Visa pays a modest dividend (currently around 0.87%). Its payout ratio is a healthy approximate 25%, its annualized five-year dividend growth rate is about 14.5%, and the company has raised its dividend for 17 consecutive years. |
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