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American Express Boosts Dividend Amid Strong Earnings Growth

American Express reported a 17% dividend increase, reflecting strong financial performance. With record revenue and rising earnings per share, investors may find this stock an attractive opportunity for growth and stability.

Date: 
AI Rating:   8

Strong Dividend and Financial Performance
American Express (NYSE: AXP) has announced a remarkable 17% increase in its quarterly dividend, from $0.70 to $0.82 per share. This increase is significant as it marks the company's fourth consecutive annual dividend boost and its largest in over a decade. Such consistent dividend growth indicates management's confidence in the long-term financial strength of the company.

The company reported record revenue of $65.9 billion for 2024, showcasing a year-over-year growth of 9%. The robust performance is further highlighted by a net income of $10.1 billion and a significant jump in earnings per share (EPS) by 25%, reaching $14.01. These figures denote a positive trend in profitability and earnings performance.

Healthy Engagement and Growth Prospects
American Express also reported strong card member spending in its fourth quarter, particularly in airline and premium cabin spending, with a growth of 13% and 19% year-over-year, respectively. The company's focus on younger demographics with fee-based cards is a forward-looking strategy that bodes well for future growth. With 25% of the fee-based consumer premium cards in the U.S., Amex demonstrates substantial growth potential, especially among millennials and Gen Z.

Additionally, the company's credit performance remains solid, with low delinquency and write-off rates, supporting the bottom line and reinforcing profitability. Management's outlook for revenue growth of 8% to 10% in 2025 aligns with the positive earnings outlook, projecting EPS between $15 and $15.50.

Share Repurchase Program
Another indicator of American Express's financial health is its commitment to share repurchase programs, spending $5.9 billion on buybacks in 2024. This move not only reduces the total share count by 17% since 2019 but also signals confidence that the stock may be undervalued.

Risks and Resilience
Despite the positive outlook, potential risks such as consumer spending downturns or increased delinquencies could impact future performance. However, American Express's focus on affluent, creditworthy customers provides a defensive edge in turbulent economic conditions.

Stocks:  AXP