6 Fintech stocks to buy on Dip

It turns out that Fintech (financial technology) is a war zone now. I found six Fintech stocks to buy on the dip. These stocks are significantly down from their highs, but all are profitable. They are all cheap now on a P/E basis and all but one pay a dividend.

It provides a unique buying opportunity for the likely survivors. This article will dive into some of the more likely winners.

You can see from the chart on the right that the average P/E for these fintech stocks has a price-to-earnings (P/E) multiple of 8.3x. Most companies have lower earnings estimates for 2023, so the 2023 P/E falls to 7.7x.

Also, the average dividend yield for this group of fintech stocks is over 4%. That makes them quite interesting for value investors.

This is a higher than average dividend yield than most other stocks. This is also another reason to buy these fintech stocks on dips.

Let’s dive in and look at these stocks.

Upstart Holdings (UPST)

Source: rafapress / Shutterstock.com

Market value: $2.13 billion

Upstart Holdings (NASDAQ:ESTABLISHMENT) operates an AI (artificial intelligence) based loan referral platform that essentially sends borrowers to different banks and loan partners and collects a fee. This makes the company very profitable.

For example, analysts now forecast earnings per share (EPS) to reach $1.48 in 2022 and rise 43% in 2023 to $2.18 per share. That lowers the P/E multiple down to 10.7x from over 15.4x in 2022.

This more than makes up for the fact that the company does not pay dividends. All the other fintech stocks on this list pay good dividends to their shareholders.

OneMain Holdings (OMF)

Source: wutzkohphoto / Shutterstock

Market value: $4.18 billion

OneMain Holdings (SNEEZE:OMF) is a financial lender and insurance company that provides loans to borrowers with lower credit quality and for car loans. The company is extremely profitable and will likely continue to be, recession or not.

Analysts forecast earnings this year of $8.60 per share, and only slightly lower to $8.54 next year. This puts OMF stock at a very low forward P/E multiple of just 4.4x for both years.

Also, the company pays a dividend of $3.80 per share, so its earnings still cover it very well. The payout ratio is reasonable at just 44%. More importantly, the dividend yield is 10%. This looks sustainable as long as earnings remain at the same level next year.

This makes the OMF share one of the best fintech shares to buy in the fall ahead.

SLM Corporation (SLM)

Source: Shutterstock

Market cap: $4.21 billion

SLM Corporation (NASDAQ:SLM) provides and services private education loans and offers traditional banking products such as savings accounts to its customers. The company is now highly profitable and analysts predict a 5.9% increase from $2.87 in 2022 to $3.04 in 2023.

That puts the stock at today’s price (July 14) of $15.47 on a low P/E of just 5.4x, falling to 5.1x for 2023 earnings. This is very cheap and seems to reflect the market’s fear of falling earnings, which so far are not in the analysts’ forecasts.

Also, the dividend of 44 cents is more than covered by earnings, as you can see. This gives the share an attractive dividend yield of 2.84%.

Analysts surveyed by TipRanks now estimate that SLM stock is worth $20.71, or +33.9% above today’s price. That makes it one of the best fintech stocks to buy on this list.

NelNet Inc (NNI)

Source: Lev Kropotov / Shutterstock.com

Market cap: $3.37 billion

NelNet Inc (SNEEZE:NNI) is a loan servicing and payment processing company with inbound call centers and software sales to independent lenders and fund management companies. The business is also very profitable.

For example, analysts now estimate that earnings will reach $7.09 this year and stay broadly flat next year. As a result, at today’s price of $89.77, the stock is at 12.2x earnings.

Moreover, earnings more than cover the annual dividend of 96 cents per share. For example, this makes the dividend payout ratio very low at just 13.5% of earnings. As a result, its annual dividend yield is 1.07%. It could clearly afford to pay a higher dividend if it wanted to.

On the other hand, NelNet has bought back its own shares. In the past year, it bought back $89 million in shares. It represents 2.64% of the market value. Therefore, its total return to shareholders is over 3.7% annually.

That makes it one of the best fintech stocks to buy on the fall.

Navient Corp (NAVI)

Source: Shutterstock

Market value: $2.20 billion

Navient Corp (NASDAQ:NAVI) is an education loan administration and business processing solutions company whose earnings are projected to fall somewhat next year. But that makes the stock very cheap now.

For example, EPS is projected to fall from $3.30 to $3.03 by 2023. Don’t worry, as this puts NAVI stock at a very reasonable P/E multiple of just 4.4x for 2022 and 4.8x for 2023 .That makes it one of the cheapest fintech stocks on this list.

Moreover, the company’s earnings more than cover the dividend of 64 cents per share. That means it has a low payout ratio of just 19.3%. Even if earnings fell by 50%, the payout ratio would still be below 50% at just 38%. In other words, the company is still likely to continue paying dividends no matter what.

That is important as the dividend yield is now high at 4.38%. This is one of the reasons why the average yield for this entire group is over 4%. In addition, the company bought back 115 million dollars of its own shares in the previous quarter. This gives the stock a run rate of 460 million dollars in annual repurchases, or 21% of the market value.

As a result, between the 4.38% dividend yield and the 21% buyback yield, the total shareholder return is over 25%.

In addition, six analysts have asked TipRanks has an average price target of $18.5, or 24% above today’s price. These factors make it one of the best fintech stocks on this list.

Western Union Co (WU)

Source: 360b / Shutterstock.com

Market cap: $6.36 billion

The Western Union Company (SNEEZE:WU) is a well-known global money transfer company that operates in two segments: consumer and business. Earnings are growing well as analysts estimate they will grow 7.3% from $1.79 this year to $1.92 next year.

This puts the stock at a cheap forward multiple of just 9.2x, and it will fall to 8.4x next year. Furthermore, the dividend of 94 cents is only 53% of the earnings forecast for 2022 and even lower at 49% for 2023. It also means that the dividend yield is now high at 5.7%.

At the top of the most recent quarter, WU bought back $154 million of its own stock. On an annualized basis ($616 million), it represents 9.7% of the market capitalization of $6.36 billion. So, including the dividend yield of 5.7%, shareholders get a total return of over 15.5% annually.

Not strange TipRanks reports that 10 analysts have an average price target of $18.22, or 12% above today’s price. This puts it high on the list of fintech stocks to buy on the dip.

As of the date of publication, Mark Hake 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 author, subject to the InvestorPlace.com Publishing Guidelines.