Interest Rate Declines Revive Appeal of Blue Chip Stocks

Interest rates are falling, making blue chip dividend stocks like American Express and Realty Income attractive for investors. Solid revenue growth and consistent dividend payouts underline their long-term potential and make them worthy of attention.

Date: 12-05-2025

AI Rating: 8

Earnings Per Share (EPS): American Express has shown strong EPS growth with a compound annual growth rate (CAGR) of 12% from 2019 to 2024, with expectations of 13% CAGR through 2027. This growth reflects robust profitability and investor confidence in future earnings growth.

Revenue Growth: The company also reported a CAGR of 10% in revenue for the same period. Analysts predict an 8% CAGR for revenue through 2027. This consistent revenue growth is crucial for maintaining its competitive position and supporting dividends.

Operating Profit Margin: Although the report does not provide specific figures on profit margins, American Express's balanced business model, combining card processing fees and interest from loans, suggests stability in its operating income.

Free Cash Flow (FCF): While explicit free cash flow figures are not discussed, the low payout ratio of 20% indicates that American Express retains a significant portion of its earnings to fund growth and dividends. This may lead to a healthy FCF in the future.

Realty Income Metrics: Realty Income, with an impressive historical occupancy rate of 98.7% and expectation for adjusted funds from operations (AFFO) growth, exhibits solid operational metrics. Its monthly dividend payments and ability to cover dividends with expected AFFO of $4.22 to $4.28 per share this year bolster its appeal to income-focused investors.

In summary, both companies showcase stable fundamentals with strong earnings and revenue growth. The historical performance and effective dividend policies are attractive in a declining interest rate environment, suggesting potential upward momentum in stock prices. This report implies both stocks could be a solid addition to a balanced portfolio, especially for those seeking income and growth.

Stocks: AXP O