American Express Thrives as Dividend Stock in Volatile Market

Amid market volatility, American Express emerges as a prime dividend stock, showcasing impressive EPS growth and stable revenue streams. Its commitment to dividend hikes coupled with a solid earnings trajectory positions it as a noteworthy investment.

Date: 27-04-2025

AI Rating: 8

**Earnings Per Share (EPS):** American Express has shown significant earnings growth, posting a remarkable 152% increase in EPS over the past decade. This impressive trajectory is a strong indicator of the company's financial health and potential for future profitability, making it appealing to investors during uncertain market conditions.

**Revenue Growth:** The company has successfully expanded its credit card base, adding 3.4 million new cards in Q1, which is crucial for driving future revenue growth. Furthermore, over half of American Express's revenue is derived from non-interest income sources, such as transaction fees, ensuring more reliable earnings even during economic downturns. This diversified revenue model should help mitigate risks associated with fluctuations in consumer spending.

**Profit Margins:** While the report doesn't provide explicit statistics on profit margins, the strong revenue base from swipe fees and the relatively low write-off rates (2.1%) indicate solid profitability. The company’s stability in earnings compared to competitors whose net write-off rates are much higher hints at better profitability management.

**Strength in Downturn:** The solid credit metrics of American Express, particularly its ability to attract higher-spending customers with strong credit scores, suggest that it is better positioned to weather economic downturns than many of its peers. This could further enhance investor confidence as they look for resilient stocks in today's volatile market landscape.

**Dividend Growth:** American Express recently announced a 17% hike to its quarterly dividend, which aligns with the company's history of significantly raising dividends (120% growth over the last decade). This consistent growth in dividends can be an attractive component for long-term investors focused on income generation.

In summary, American Express stands out in the current investment landscape, primarily driven by favorable EPS growth, consistent revenue expansion, and sound credit metrics, enhancing its appeal as a dividend growth stock amidst market volatility.

Stocks: AXP