Will American Express Company (AXP) Hike Its Dividend? – Capital One Financial Corp. (COF), The Bank of New York Mellon Corporation (BK)

Should American Express ask for a dividend increase or share buyback?
With such an impressive showing on the stress test, it seems almost certain that American Express will request — and will be allowed to bestow — a larger dividend, as well as institute a share buyback program. Indeed, only the two large custody banks, The Bank of New York Mellon Corporation (NYSE:BK) and State Street Corporation (NYSE:STT) had higher common ratios than American Express. Considering that big regional bank BB&T Corporation (NYSE:BBT) , which analysts had pegged as one of the more highly capitalized institutions, scored a 9.4% ratio, AmEx’s results are all the more impressive.

Following the stress test last year, AmEx embarked upon a share repurchase program to the tune of $4 billion in 2012, reserving another $1 billion in buybacks for the current quarter. The company also announced a boost in the quarterly dividend to $0.20 from $0.18 per share.

How much will AmEx share with investors?
Will American Express be a little more generous this year? It certainly seems like it could afford to be. The company has many irons in the fire, and has recently begun exploring the social media side of credit card purchasing through a new deal with Twitter. As Fool analyst Dan Caplinger has noted, the company could easily bump up that payout quite a bit without feeling a pinch.

Certainly, with such a stellar financial checkup under its belt, AmEx could afford to be magnanimous with its investors — provided it stays under the Fed’s comfort level of less than 30% of estimated after-tax net income. Soon, we’ll know just how benevolent they plan to be.

The article Will American Express Hike Its Dividend? originally appeared on Fool.com and is written by Amanda Alix

Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends American Express.

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