WU Stock Could Provide Robust Income & Stellar Price Appreciation
The emergence of cryptocurrencies has sparked a lot of debate about how the future of money movement will look. But, despite all the buzz these digital assets have gotten and their die-hard following, the reality is that cryptocurrencies are still in their infancy stage, with minimal adoption so far. The old way of transferring money still prevails.
Look, I am not here to tell you what cryptocurrencies will do or what technology is needed to make the movement of money faster, better, etc. I am here to tell you about income opportunities, and one company that stands out in the midst of all this is Western Union Co (NYSE:WU).
One could certainly argue that cryptocurrencies are a direct competitor to Western Union and could eventually disrupt its business. That concern has put pressure on WU stock. However, consumers are still choosing traditional money transfers, which could mean consistent income for those who own WU stock.
A little about the company…
Headquartered in Denver, Colorado, Western Union Co offers money movement and payment services globally. The company operates through two business segments: Consumer Money Transfer and Consumer Services.
The Consumer Money Transfer segment provides money transfers for international cross-border and intra-country transfers, primarily through a network of retail agent locations, websites, and mobile devices.
The Consumer Services segments offers services such as bill payments, money orders, retail foreign exchange, prepaid cards, lending partnerships, digital wallets, and media network. (Source: “Profile,” Yahoo! Finance, last accessed February 26, 2025.)
Stable Financials with Some Bright Spots
On February 4, Western Union reported its financial performance for the 2024 fourth quarter and full year. There’s some stability as well as some particularly bright spots that could give the company a boost in the coming quarters.
For the full year, revenue at the company was registered at $4.23 billion—up just 0.5% on an adjusted basis and declining three percent on a reported basis.
Western Union’s generally accepted accounting principles (GAAP) earnings per share (EPS) were $2.74, and its adjusted EPS were $1.74. In 2023, GAAP EPS were $1.68 and adjusted EPS were $1.74.
One bright spot worth watching at Western Union is the Consumer Services segment; there’s robust growth taking place. In the fourth quarter of 2024, revenue for this segment grew 56% on a GAAP basis and 23% on an adjusted basis. For the full year, Consumer Services revenue grew 28% on a GAAP basis and 15% on an adjusted basis.
Looking ahead, Western Union has provided an optimistic outlook for fiscal year 2025. The company anticipates full-year adjusted EPS of between $1.75 and $1.85. Assuming that EPS comes in even at the lower end of the range, it will still be higher than in 2023 and 2024. (Source: “Western Union Reports Fourth Quarter and Full Year 2024 Results,” Western Union Co, February 4, 2025.)
An even better financial performance in the coming quarters could give a boost to WU stock.
WU Stock Offers a Consistent Dividend & High Yield
Western Union has a solid history of providing consistent dividends to its shareholders.
For the first quarter of 2025, the company has declared a dividend of $0.235 per share. On an annualized basis, WU stock’s dividend amounts to $0.94 per share, or a frothy forward dividend yield of 8.73%.
Over the years, those who have held WU stock have seen their income grow as well. In 2015, Western Union paid a dividend of $0.62 per share. Assuming a $0.95-per-share dividend in 2025, this represents an increase in income of close to 52% over the decade.
How does this dividend yield compare to the long-term average?
Currently, WU stock’s dividend yield is on the higher end. The five-year average dividend yield is around 5.49%. So, one could say that investors are getting a decent deal at the moment.
It’s also worth noting that the payout ratio is just a little over 34%. This shows that Western Union is focused on rewarding shareholders and maintaining its financial health.
The Lowdown on WU Stock
WU stock is a great income and capital appreciation opportunity despite all the competition from cryptocurrencies.
Don’t forget that consumers are still choosing to use traditional money movement methods, so, with Western Union being a major player, it could continue to benefit from the situation.
Also keep in mind that institutional investors love WU stock. At the time of writing, 630 institutions own 94.53% of all outstanding shares. Looking at this massive figure, one could even say they are betting that Western Union could reward them immensely.
The Vanguard Group, BlackRock Inc, and T. Rowe Price Associates Inc collectively own over 100 million shares of WU stock.