5 Best Long-term Stocks to Buy Now

3. American Express (NYSE: AXP)

The credit card company American Express is also among the long-running investments of Oracle of Omaha. Buffett’s investment holding first initiated a position in a credit card company more than five decades ago. American Express currently is Buffett’s fourth-largest investment and it accounts for 6.6% of the portfolio.

According to Insider Monkey analyst, “The credit card company American Express is well known for offering sustainable growth in returns to shareholders. The credit card company currently offers a quarterly dividend of $0.43 per share, yielding around 1.39%. Its average dividend growth in the past five years is above 10%. The credit card company has generated $8.75 billion in the September quarter revenue while its earnings per share came in at $1.30 – up significantly from the quarterly dividend of $0.43 per share.”

We also shared Bill Nygren’s AXP comments earlier this year:

“With American Express, we believed the worst-case scenario was significantly better than all that. We think the company has done an excellent job in improving its cardholder value proposition in recent years by making significant investments in merchant acceptance, cardholder rewards and services, and small-business payment tools. Relative to entering the last financial crises, it has dramatically cut costs and strengthened its balance sheet structure.

The payments-network side of the business is now more competitive with Mastercard and Visa. Given all that, in the adverse Fed scenario, we would still expect American Express to earn $4 to $5 per share this year. Two years from now, we think it should be earning more than twice that. With the stock where it is today [at a recent $96], we believe that’s too cheap for this caliber of business.”