Now, American Express – AXP, they call it – is a curious beast indeed. They’ve just plumped up their quarterly dividend by a rather splendid 16%, to 95 cents a share. Not a bad little treat for those who hold their cards, eh? It yields 1.2%, which, let’s be honest, isn’t enough to buy a castle, but it’s a perfectly respectable sum for a company that seems determined to grow, and grow, and grow.
The odd thing is, the share price has been doing a bit of a wobble lately – down about 17% this year. A bit like a portly gentleman trying to do a jig. Makes you wonder, doesn’t it? Is this a moment to sneak in and grab a few shares before the price decides to behave itself?
Strong Business Momentum
Any decent dividend, you see, needs a healthy business underneath it. And American Express, in 2025, was positively bursting with health. Their fourth-quarter revenue, after all the sums and subtractions, rose 10% to a whopping $19 billion. A truly enormous pile of money, enough to make a dragon blush.
And this wasn’t just top-line fluff. This extra revenue trickled all the way down to the bottom line. Earnings per share jumped a rather impressive 16% to $3.53. It’s like they’ve got a secret sauce for turning pennies into pounds, or rather, dollars into… well, more dollars.
The whole year was a triumph. Revenue climbed 10% to around $72 billion, and earnings per share, once they’d tidied up a few little accounting oddities, rose 15%. It’s enough to make a lesser company green with envy.
And the clever folks at American Express reckon this momentum will continue. They’re predicting earnings per share of $17.30 to $17.90 for 2026. That’s a 14.4% jump, and a signal that they’ve got plenty of room to keep handing out those dividends.
In fact, the dividend payments will only gobble up about 21.6% of their earnings. A ridiculously low figure, which means they can keep increasing those payouts for years to come. They’re practically swimming in money, these people.
But it’s not just about dividends. American Express is also busy buying back its own shares. They spent a colossal $7.6 billion doing so in 2025 – $2.3 billion on dividends and $5.3 billion on share repurchases. They’ve shrunk the number of shares floating around by 7% since 2022. A rather aggressive tactic, wouldn’t you say?
American Express Stock: Buy, Sell, or Hold?
Of course, one must consider the price. At the moment, American Express is trading at a price-to-earnings multiple of around 20. Not exactly a bargain basement deal, is it? It suggests the market is expecting continued double-digit growth. And it’s a slight premium to their five-year average of 18, but I reckon it’s justified, given how consistently they’ve been growing.
The main worry, naturally, is if people start tightening their belts or if the economy takes a tumble. If credit delinquency rates start creeping up, that would be a nasty surprise. But American Express seems rather well-insulated, with its clientele of rather affluent customers.
Ultimately, I rather like the stock at this price. Their wealthy customers are more likely to keep spending even when times are tough. And the underlying business is clearly doing very well. The combination of a 16% dividend increase, a low payout ratio, double-digit earnings growth, and an aggressive share-repurchase program makes this stock an attractive option for investors seeking a steadily growing income stream.
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2026-03-03 05:12