American Express (AXP 0.68%) has gained a reputation as an incredibly reliable, robust financial services company over the past several years, demonstrating resilience under pressure and a strong spirit of innovation. Although it's marking its 175th anniversary in business this year, it's as modern and relevant as ever and continues to innovate, finding new ways to keep growing its operations for new generations of customers.
Here are three reasons this company's stock is flashing a bright buy signal right now.
1. American Express targets a resilient customer base
American Express targets an affluent consumer who tends to have more money to spend and is less influenced by adverse changes to the economy. The main spending categories that its customers use AmEx cards for are travel and entertainment, rather than goods and services. This suggests its clientele spends on the extras in life (although that's been muted recently in the inflationary environment).
Even as indicators point to a more volatile economic situation in 2025, American Express' financials suggest strength and growth. In 2025's first quarter, revenue (adjusted for currency and the leap year) increased 9% year over year, and earnings per share (EPS) were up from $3.33 last year to $3.64 this year.
NYSE: AXP
Key Data Points
The focus on the affluent customer also helps AmEx maintain best-in-class risk management and default rates. In the first quarter, payment delinquencies were 1.3% compared to an industry average of 2.6%, and net write-offs were 2.1% compared to an industry average of 3%. AmEx reduced its provision for losses after building it for the past three quarters, and CEO Stephen Squeri attributed it to the company's focus on high-quality customers, which "combined with our risk management capabilities ... has widened the margin of safety and ensured profitable growth."
Although it has a reputation as a business-professional-focused company, American Express has embraced an expanded model geared toward attracting a younger consumer. These younger, affluent members are responsible for much of its growth today, and they'll also drive future growth. Consider the rates of revenue growth based on age category in Q1:
| Customer Segment | Revenue Growth in Q1 2025 (YOY) | % of Total |
|---|---|---|
| Millennials | 14% | 35% |
| Generation X | 5% | 36% |
| Baby boomers | 1% | 29% |
| Overall | 7% | N/A |
Data source: American Express quarterly reports. YOY = year over year.
2. American Express has a closed-loop model that benefits from low or high interest rates in different ways
In addition to its credit card business, American Express has a full-service, online bank. It already has its affluent members to cross-sell products to, which is why it has such strong credit metrics. When interest rates are low, these customers spend more, and default rates decline. When interest rates are high, American Express benefits from higher net interest income.
The bank also supplies more ways for the company to make money. It's interesting to see how, even though American Express services a much smaller spending base than rival credit card networks Visa and Mastercard, it takes in much more revenue. That's a combination of its higher spenders and varied revenue streams.
Data by YCharts.
3. American Express pays a reliable and growing dividend
When the market is volatile, investors tend to run toward safe, dividend-paying stocks. There are several reasons safe stocks are attractive right now, mostly centered around stability. One of those reasons is a reliable passive income stream. Stock value might be leveling off, but you'll still get your dividend check in the mail.
Data by YCharts.
American Express' stock performance is strong, depressing the yield on its dividend. Because stock performance and dividend yield tend to be inversely correlated to each other, American Express' dividend yields just 1.1% at the current price. That isn't incredibly high, but it's reliable and growing.
A stock that's past its growth days generally yields more than a high-growth stock. American Express has outperformed the S&P 500 by more than double over the past five years, tripling in total return, and it gives investors the chance to grow their money in addition to the dividend.
