10. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 62
5-Year Average Payout Ratio: 24.01%
With a five-year average payout ratio of over 24%, American Express Company (NYSE:AXP) ranks tenth on our list of the best dividend stocks. The American bank holding company specializes in a wide range of related services and products. Its earnings came in strong in the third quarter of 2024. It reported revenue of $16.6 billion, up 8% from the same period last year. This marked the company’s 10th consecutive quarter of record revenue. In addition, it experienced a 6% rise in overall Card Member spending, with card fee revenue growing by 18%. It successfully added 3.3 million new premium Card Members, all while maintaining high retention rates, strong credit performance, and disciplined cost management. Reflecting on its robust performance and solid earnings from its core operations, the company increased its full-year EPS guidance to $13.75 – $14.05, up from the earlier estimate of $13.30 – $13.80. The projected full-year revenue growth remains consistent with the initial guidance, around 9%.
Analysts believe that American Express Company (NYSE:AXP) is a solid company due to its economic moat, which consists of enduring competitive advantages that have solidified its industry position and protected it from rivals. A key component of this moat is its brand, which is viewed as premium. This strong reputation attracts high-income customers who can afford to spend more than the average consumer. By targeting this demographic, the company can impose high annual fees on its premium credit cards. Despite these fees, the number of active cards has grown steadily, rising from 111.1 million in Q3 2014 to 145.5 million in the latest quarter. Moreover, the company has experienced a 13% year-over-year increase in average fees per card in Q3.
American Express Company (NYSE:AXP) was highlighted by GreensKeeper Asset Management in its Q3 2024 investor letter:
“American Express Company (NYSE:AXP) was our second-largest contributor this quarter, with a return of +17.1%. AXP continues to invest in its customers beyond traditional credit card rewards, recently enhancing its Global Dining Access to provide Platinum cardholders with exclusive reservations at premier restaurants worldwide. This focus on unique experiences has attracted a younger demographic, with millennials and Gen Z driving most of the customer acquisition and card spending growth in recent quarters. Exclusive events are more challenging to replicate than standard point reward systems, presenting a challenge for competing card issuers that lack AXP’s scale and concentrated base of affluent consumers. AXP has fine-tuned its offerings over decades to strengthen its network effect and shows no signs of slowing down.”
On December 13, 2024, American Express Company (NYSE:AXP) declared a quarterly dividend of $0.70 per share, which was in line with its previous dividend. The company has always remained committed to its shareholder obligation, paying $15 million to investors in dividends in the most recent quarter. The stock’s dividend yield on January 13 came in at 0.94%.
American Express Company (NYSE:AXP) was included in 62 hedge fund portfolios at the end of Q3 2024, compared with 68 in the previous quarter, according to Insider Monkey’s database. The collective value of these stakes is more than $45 billion. Warren Buffett’s Berkshire Hathaway was the company’s leading stakeholder in Q3.
