Shares of American Express (AXP +0.16%) have shed about 20% of their value since the start of 2026, pulling back to around $300 as of this writing. Broader market concerns about macroeconomic headwinds and geopolitical conflicts appear to have spooked investors.
But, for the long-term investor, this sell-off arguably looks like a gift. Under the hood, the credit card specialist is executing exceptionally well, delivering strong earnings growth and aggressively rewarding shareholders.
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Strong earnings and a fast-growing dividend
American Express closed out 2025 with exceptional momentum, the company revealed when it reported its latest earnings in late January.
Full-year revenue rose 10% to $72.2 billion. Earnings per share hit $15.38, a 15% increase on a non-GAAP (adjusted) basis that excludes a prior-year gain from the sale of its Accertify business.
And the company's fourth quarter was particularly impressive. Revenue rose 10% to $19.0 billion, and earnings per share jumped 16% year over year. Fueling the quarter, the integrated payments company's billed business climbed 9% year over year to $445.1 billion, reflecting continued resilience in consumer spending.
Further, the company's highly profitable business model generates substantial cash, and management is committed to sharing it.
In March, the board authorized a 16% increase to the company's quarterly dividend, bringing the payout to $0.95 per share, and giving the stock a dividend yield of 1.3% as of this writing.
Additionally, the dividend is backed by strong cash flow. Based on the company's 2025 adjusted earnings per share, the new annualized payout of $3.80 equates to a low payout ratio (a company's dividend payout as a percent of its earnings) of less than 25%.
This leaves American Express with immense headroom to keep hiking its dividend in the years ahead, even if earnings growth temporarily moderates.
And the company's capital return program extends well beyond the dividend.
In 2025, American Express returned $7.6 billion to shareholders, with about $2.3 billion distributed as dividends. About $5.3 billion was spent on share repurchases. This aggressive buyback program reduced the company's share count by about 2% last year, providing a direct tailwind to per-share earnings.
Pricing power and a compelling valuation
How is American Express driving this consistent top- and bottom-line growth?
A major factor is the company's exceptional pricing power, driven by its ability to regularly refresh its premium products while retaining its members and capturing younger consumers.
For instance, last September, American Express recently rolled out a major refresh of its flagship Platinum Card, increasing the annual fee by nearly 30% from $695 to $895. To justify the steep hike, the company added a slew of lifestyle perks, including enhanced statement credits for Uber, dining via Resy, more credits toward hotels, and more.
It works because consumers -- particularly Millennials and Gen Z, which now account for the majority of the company's new customer account acquisitions -- are highly engaged with these premium travel and lifestyle benefits. This demographic shift, therefore, provides a long runway for future growth as these younger cardholders enter their prime earning years.
NYSE: AXP
Key Data Points
Of course, no stock is without risks.
A sudden economic downturn, for instance, could threaten the discretionary spending volumes that power the company's transaction fees. And American Express's lending exposure could amplify the impact of a downturn.
But at current prices, the stock's valuation arguably does a good job of pricing in risks.
Trading at around $300 at the time of this writing, shares are valued at roughly 17 times the midpoint of management's 2026 earnings guidance of $17.30 to $17.90 per share -- an attractive price-to-earnings ratio for a high-quality lender with a sticky customer base.
Overall, I believe the stock's recent sell-off offers investors a good entry point. For investors seeking a resilient financial institution with pricing power, aggressive buybacks, and a fast-growing dividend, American Express looks like a top-tier stock to buy and hold for the next decade.
