3 Financial Services Stocks to Buy and Hold for the Long Haul (2024)

The pandemic-driven transition from cash to digital payments has brought about a significant change in the financial services industry, and this change is here to stay. The global financial sector isgoing through a shiftas people move from cash to online payments, increased card usage, and mobile banking.Thisnot onlyadds convenience to our livesbut has also brought about higher security and ease of use.With financial companies offering all services under one roof, consumersnowdo not need to look for multiple applications to get the job done. There are several financial services stocks worth adding to your portfolio, and I’ve picked the top three stocks suitable for the long term.These are well-established companies with a global presenceandsomeeven paya dividend.Let’s take a look at them.

American Express (AXP)

Up 25% year-to-date and 41% in the past 12 months, American Express(NYSE:AXP) stock is on a rally.Trading at $236 today, the stockhas had an excellent start to 2024.It reported an impressive first quarter with an 11% year-over-year jump in revenue and a 34% YOY jump in net income.The management expects the full-year revenue to grow between 9% to 11%. It already has over 140 million cards in force on the global network.

One solid reason to hold the stockfor the long termis its user demographic.American Express saw 60% of new customer accounts from Gen Z and Millennialsandthis means itcan attract a younger consumer base.

As young people start making and managing their money, they willbe on the lookoutfor cards and fintech companies that make money managementeasier, and American Express has shown its strength in this segment. The company recently announced a 17% hike in dividend andenjoysa yield of 1.18%. Even during the pandemic, the companyput a pause onthe dividend increases but has never put the dividend on hold, showing its commitment to rewarding shareholders.

As more people use cards, American Express will continue to benefit. American Express looks likea very attractivelong-term investmentand onethat will continue rewarding you over the years.

PayPal (PYPL)

Financial services provider PayPal(NASDAQ:PYPL) is up 3% year-to-date and exchanging hands for $63. The stock is significantly down from the all-time high of $298 it hit in 2021. Despite the stock remaining flat since the beginning of the year, this is the one for the long term. Firstly, do not expect an immediate turnaround by the company. You will have to remain patient if you want to reap returns.

PayPal reported revenue growth of 9% in thefirst-quarter results, and investors weren’t happy because they’re used to higher growth percentages. The company is takingthe necessarysteps to cut costs and generate higher revenue.

It is an industry leader with a 45% market share in online payment processing services. Despite the competition, PayPal’s core business remains robust. It has seen positive active user growth andan improvement inmonetization per user.

Another catalyst that could work for the business is the advertising platform. Several companies have seen a revenue surge due to advertising, and PayPal is taking its chance here.

The company announced it willlaunch its advertising network, and with 427 million active users, this could bea smartmove. This platform will rely on the transaction data generated by the active accounts. The new ad business can make a lot of difference to the company’s profits and could take the stock higher.

PayPal is a long-term buy-and-hold, and the stockis looking very cheap right now.

Visa (V)

My favorite fintech stock,Visa(NYSE:V)is exchanging hands for $270. It is up 4% YTD and 19% in the past 12 months. The company has cracked the code of a successful business and makes money every time a Visa cardis swiped.Thisallows it to keep the operating costs at a minimum while ensuring steady revenue.

Visa reported impressive financials even during high inflationandit generatesenough free cash flow to keep rewarding shareholders.Visa enjoys a dividend yield of 0.77% and has increased the dividends annually for 16 consecutive years.

It caters to over 100 million merchants and has tremendous upside potential. Over 60% of the credit cards across the U.S. are Visaandas we continue to walk towards a cashless economy, this numberis only going toexpand. More people have a Visa credit card as compared to any other card globally. In thesecond quarter, Visa reported a revenue of $8.8 billion, up 10% YOY and a 16% jump in cross-border transaction volume. Its services revenue also saw a 7% jump tohit$4 billion.

While Visa is not the cheapest stock out there, it is onestockwith significant upside potential. The company’s global operations and increasing market share make it one of the best financial services stocksto own. It is a dividend powerhouse that can keep rewarding you for many years.

On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.