AmEx (AXP) Rewards Shareholders With a 16.7% Dividend Hike

American Express Company AXP announced that its board of directors increased its cash dividend to 70 cents per share from 60 cents, reflecting a 16.7% jump from the prior payout. The dividend will be paid out on May 10, 2024, to shareholders on record as of Apr 5.

American Express has been a regular dividend-paying company for more than three decades, which is commendable. Based on the stock’s Mar 6 closing price of $218.45, the new dividend will yield 1.1% to the company. Prior to the recent dividend hike, American Express had sanctioned an increase of roughly 15.4% in its quarterly dividend in 2023. 

The year 2023 seemed to be another promising year for American Express on the capital deployment front. The company bought back 21.6 million common shares worth $3.5 billion in 2023. It also paid dividends worth $1.8 billion to shareholders in the same time frame. Overall, share repurchases and dividends denoted around 62% of total capital generated in 2023, thereby highlighting AXP’s intensified focus on capital deployment. The company targets to maintain a 20 to 25 target payout ratio. American Express is backed by a solid cash balance and robust cash generation abilities. As of Dec 31, 2023, AXP’s cash and cash equivalents increased 38% year over year from the end of 2022.

Along with consistently returning wealth to shareholders in the form of share buybacks and dividends, the company continues to comply with the Basel III requirement of having an adequate capital ratio. Per recent disclosures, AXP is required to maintain a common equity tier 1 capital ratio of 7%, whereas the company ended 2023 with a ratio of 10.5%. This highlights that although the company is raising dividends and repurchasing shares, it is also generating enough income to comply with the Basel III capital requirements. This should instill investor confidence in the company’s prospects.

Shares of American Express have gained 24.6% in the past year compared with the industry’s 10.6% rise. AXP currently carries a Zacks Rank #2 (Buy).

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Other Stocks to Consider

Some other top-ranked stocks from the finance sector are Cboe Global Markets CBOECoinbase Global COIN and Assurant, Inc. AIZ.

Cboe Global delivered a trailing four-quarter average earnings surprise of 4.1%. The Zacks Consensus Estimate for CBOE’s 2024 earnings suggests a year-over-year rise of 6.4%. It presently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Coinbase has an excellent track record of beating earnings estimates in each of the last four quarters, the average being 377.6%. The Zacks Consensus Estimate for COIN’s 2024 EPS indicates a year-over-year increase of 173%. It currently sports a Zacks Rank #1.

Estimates for Assurant’s 2024 EPS indicate a year-over-year increase of 3.4%. The company beat earnings estimates in each of the past four quarters, the average being 42.2%. It presently carries a Zacks Rank #2.

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American Express Company (AXP) : Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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