When it comes to dividend stocks, American Express (AXP) may not be the first name that comes to mind. The financial giant’s dividend yield currently stands at around 0.9%, below the S&P 500 average. Yet a closer look reveals that the company has steadily shifted toward a more shareholder-friendly approach—consistently raising dividends and buying back shares—making it a solid piece in long-term oriented portfolios.
While the starting yield is modest, American Express stands out for its dividend growth. Over the past four quarters, it paid a quarterly dividend of $0.82 per share, or $3.28 annualized, reflecting a 17% increase from the prior year and a more than 90% rise over the past five years. This aggressive payout policy signals management’s strong commitment to returning capital to shareholders.
Beyond dividends, the company is also active in share repurchases. In Q3 2025 alone, it spent about $2.3 billion to buy back 7.3 million shares. Over the past five years, total buybacks have exceeded $25 billion. This not only supports earnings per share (EPS) but also provides a cushion for the stock price.
Investors need not worry much about the sustainability of Amex’s dividend growth and buybacks. In the third quarter, the $0.82 quarterly dividend represented only about 19% of diluted EPS ($4.14). The company expects full-year EPS between $15.20 and $15.50, well above the current annual dividend outlay. Strong profits leave ample room for both reinvestment in the business and shareholder returns.
American Express’s business model is key to its ability to reward shareholders. Unlike Visa and Mastercard, Amex operates a closed-loop network—issuing its own cards and processing transactions—which allows it to earn revenue from transaction fees, interest on balances, and merchant charges. Its strategy focuses squarely on the premium segment, using rich cardmember benefits to attract and retain customers. Hefty annual fees act like “subscription revenue,” delivering steady cash flow.
The company has also laid a strong foundation for long-term success, particularly in attracting younger clients. About 64% of new accounts globally come from Millennials or Gen Z, and these customers generate roughly 25% higher spending than other cohorts—a promising driver of future growth.
While American Express’s dividend yield appears low on the surface, its compelling dividend growth track record, large-scale share repurchases, unique profit model, resilient cash flow, and clear long-term client strategy together create an appealing blueprint for dividend-growth investors. For those looking to add a quality blue-chip name to their portfolio, American Express is increasingly demonstrating its distinct value through rising shareholder returns and business durability.
