Tuesday, November 28, 2023

Weather Update And Interesting Thoughts On Visa

As I'm writing this blog post on Thursday, November 16th, the weather here in Central Wisconsin is beautiful. This is especially true for this time of year. It's expected to reach a high of 62 degrees Fahrenheit today. Ergo, I plan on getting outside soon.

As readers will recall from my updated posting schedule blog post, my writing one week out of each month will be meaningfully reduced. That's because I am settling into a role at Dividend Kings and also working on building my emergency fund up. Thus, I won't resume writing my monthly stock watch list post likely until January 2024.

In the meantime, here are just thoughts that popped up in my head shortly after writing an article on Visa (V) over at Seeking Alpha.

Visa Practically Has License To Print Money

One of the biggest takeaways from my article continued to be V's unbelievable profit margins. In the first nine months of its fiscal year 2023, the company turned 54.4 cents out of each $1 of net revenue into free cash flow.

Short of printing money, the closest thing that I can think of in terms of free cash flow margins to V is my home state's lottery. In the last 35 years, the Wisconsin Lottery has paid 56.9% of its revenue out in prizes. Operational expenses accounted for another 6.4% of total revenue over that time.

This implies that the Wisconsin Lottery's profit margin since its inception has been in the high-30% range. To me, this is just mindboggling and really goes to show just how lucrative V's business model and wide competitive moat make it.

Concluding Thoughts:

That's all I really have for this week, so I hope readers found value in the additional perspective regarding V's amazing profitability. Soon, I plan on highlighting the dividend raises that I received in November to date and looking ahead to December.


Since I'm not aware of any business that is more profitable than V, do you know of any publicly traded companies with higher margins?

Thank you for your readership and I look forward to your comments below!

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