Why Visa Remains a Clever Pick for the Patient Investor in 2026

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In the grand game of financial chess-the one where the pawns are stocks and the kings are costly toys-Warren Buffett’s Berkshire Hathaway (BRK.A +0.09%) and its somewhat eccentric, slightly greedy cabal of holdings have long since demonstrated a knack for playing the long game. With a portfolio that includes over 40 publicly traded companies and an affinity for the Dow Jones Industrial Average (^DJI +1.08%), it’s as if Mr. Buffett has decided to collect the best pieces like a collector of rare, slightly tarnished artifacts.

Among Berkshire’s crown jewels are four of the Dow’s finest-Apple, American Express, Coca-Cola, and Chevron-all businesses that, like well-made clocks, seem to run on inertia and a bit of good luck. Add to this the shiny new addition of Amazon, which waltzed onto the Dow stage last year, and Visa-an ingredient in the grand financial alchemy that turns small deposits into giant profits-makes a notable cameo in this play.

Today’s intrigue: why, amidst the glittering array of options, is Visa my top pick for 2026? Explained best through the lens of a cautious investor with an eye for the long haul and a distrust of overhyped fairy tales.

Visa: The Golden Goose That Lays High-Fat Cash Eggs

Berkshire’s publicly accessible treasure chest-that is, its equity portfolio-is worth roughly $302 billion. But some say the real treasure lies within its control over businesses too secret or too complex for the average eye. Chief among these is its property and casualty insurance empire-an elaborate honey trap for premium payments, and a neat device for converting risk into bottled profit. It’s as if Buffett’s financial magicians have a knack not merely for finding value but for convincing the world that risk is really just opportunity wearing a disguise.

But the real pièce de résistance in the digital vault is Visa-arguably the most agile of the three major credit card behemoths (American Express and Mastercard being its more stately siblings). As the biggest kid at the corporate playground, Visa stands on a mountain of transaction volume and market cap, waving its digital wand and summoning more merchants into its fold-which, for those unfamiliar with the magic language of finance, means it makes more money each time the world swipes a plastic rectangle.

Every new card that joins the Visa network is like planting another seed on the financial farm. The more cards, the more merchants compelled to accept the brand, which leads to a virtuous circle of growth. It’s a perpetual motion machine-or at least it was until someone suggested that perpetual motion was a bit of a fancy myth, like flying pigs or currency that stays stable.

By examining Visa’s business chart, one notices that it’s remarkably good at converting nearly half of its revenue into free cash flow (FCF)-a sign that the business runs on lean fuel and not on the fumes of hype and excess. This efficiency is one of the many reasons the company looks more like a well-oiled machinist’s marvel than a fragile castle of sand.

Visa’s expenses are primarily dedicated to keeping its digital highways open-maintaining a network that’s more of a superhighway than a dirt road, along with paying its staff and the marketing wizards. Notably, it sidesteps issuing its own cards, which spares it the headache and heartache of bearing credit risk-the very sort of expense that would make a mortal investor weep. Financial institutions like JPMorgan Chase, Bank of America, and Wells Fargo take on that burden, handing Visa the vast, lucrative profits while bearing the disastrous credit card habits of the populace.

What’s more, Visa isn’t burdened with paying rewards out of its own treasury but does so via its banking partners-rather like the Queen’s court handing out favors, but without the mess of royal bloodshed. These partners, through cards like Chase Sapphire or BofA’s Cash Rewards, fund the perks while Visa quietly counts its money and plans its next move.

Shareholder Riches: Cash Flows and Still More Cash Flows

Visa’s profit magic isn’t just a myth-its business model is a plainsong of efficiency. The company, in fiscal year 2025, generated about $23 billion from operating activities, a figure which sounds more like a tax collector’s dream than a simple business. Its capital expenses? Minimal-merely about $1.5 billion, or what one might spend on a minor war-meaning nearly all of its operating cash flows become free cash flow (an astounding $21.58 billion). And what does it do with this bounty? It mostly shuffles it back to shareholders, either by buying back its stock (to make each remaining share more valuable) or paying dividends (a gentle thank-you note to the patient investor).

In fiscal year 2025, the company bought back $18.19 billion of its own shares-more than quadrupling the cash sent out in dividends. This tactic isn’t just corporate window dressing; it’s a deliberate, calculated attempt to shrink supply, boosting earnings per share and making each piece of the pie more potent. With fewer shares in circulation, the remaining slices-each representing a greater share of the company’s earnings-taste all the sweeter for the investors who stayed committed.

Despite Visa’s stock having multiplied more than fourfold in the last decade, its price-to-earnings ratio remains modest at 32.3 times trailing earnings-still lower than its 10-year median of 34.3-an indicator that the market hasn’t yet fully appreciated Visa’s stealthy, steady potential for growth. If it directed all its buyback earnings into dividends, yields would surge to over 3.6%, but the shrewd long-term investor would much prefer it keep buying back shares-after all, the best magic is in making your own magic stronger.

Visa: The Unsung Knight of the Financial Realm

In the increasingly convoluted world of indexes and overhyped tech darlings, Visa remains a bastion of reasonable valuation, a rare good horse in a race of thoroughbreds whose legs are tied with inflated valuation ribbons. The broader markets, such as the S&P 500, seem to have an uncanny talent for inflating prices faster than earnings can keep up-a sort of economic inflation-party, with everyone invited-but Visa’s valuation keeps a cool, sensible pace, just enough to make it attractive without crossing into the realm of recklessness.

Moreover, Visa isn’t stuck in the slow-moving cycle of Coca-Cola’s mid-single-digit growth; it’s poised to expand its earnings into the low double digits annually, even if the spending habits of consumers take a gloomy turn or the blue skies turn gray. It’s a rare breed: a champion of stability and growth cohabiting in the same business.

All things considered, Visa is a candidate for the kind of investment where patience is rewarded, and the sheer fact that it remains a top choice for 2026 is a testament not just to its current strength, but its enduring promise-and that, my friends, is the kind of sturdy investment wisdom that even the Unseen University’s more competent magicians would envy. 🧙‍♂️

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2025-11-23 02:27