15% jump in FY earnings makes this stock a top FTSE 100 buy for me

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A card payment machine

Payment processing giant Worldpay Group (LSE: WPG) announced this morning a 15% year-on-year jump in revenue and EBITDA. As global consumers increasingly turn away from cash to card payments I believe this may just be the beginning of a huge run of success for the company and its shares.

In the medium term, management is guiding for 9%-11% annual growth in net revenue as the company expands its client base, moves into new regions and increases the range of services offered. Even more exciting for shareholders is the fact that earnings should rise even faster than sales as the company takes advantage of economies of scale and slowly lowers capex as it migrates customers to its new platform.

Besides rapid growth in the market at large for online payment processing, I like Worldpay because it runs a high-margin business that kicks off considerable amounts of cash flow. In 2016, operations generated £384m of cash from £1.1bn in net revenue. For the time being a big chunk of this cash is being invested into growing the business and paying down the £1.3bn in net debt its former private equity owners saddled it with.

But this still left £170.9m in free cash flow and as the business scales and reduces its leverage I believe there is incredible dividend potential for shareholders. With shares trading at a very reasonable 23 times forward earnings, and both sales and profits growing by double-digits, I think Worldpay is a cracking FTSE 100 stock for long-term investors.

Hopefully a guide to the future

The dividend potential that highly cash generative payments businesses bring to the table for income investors is clear in the 5.6% shares of Paypoint (LSE: PAY) currently yield. Paypoint is a significantly less sexy business than Worldpay as is it focuses on collecting bill payments and till transactions at British and Romanian convenience stores.

While this may not be a high growth market in the UK, the company's shareholders shouldn't be too worried as the business is branching out into growth markets such as parcel pick-up and taking card payments. Transactions from both of these operations grew in double-digits in the quarter to December 31, more than compensating for a decline in mobile top-up transactions.

On top of that, the company is growing through its exposure to Romania, where cash remains very popular, especially in rural areas. This is where Paypoint thrives by offering these consumers a way to pay bills at one of its 11,055 sites. Operations in the Central European nation are now profitable, which opens up the very real possibility of the company moving into neighbouring countries with similar cash-heavy economies.

The business is also an asset-light one as it rents out its terminals to stores, leading to reliably high cash flow and an underlying net cash position of £28m at the end of the calendar year. With wads of cash and earnings that cover the 5.6% yielding dividend 1.37 times over, I see plenty of reason for income investors to love Paypoint for a long time to come.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK owns shares of PayPoint. The Motley Fool UK has recommended Worldpay. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.