American Express (NYSE: NYSE:AXP) continues to be a significant part of Warren Buffett's Berkshire Hathaway (NYSE:BRKa)'s investment portfolio, holding 20% of the outstanding shares, equivalent to $26 billion. The credit card giant's stock has seen no significant growth this year, and it has dropped about 25% from its peak.
Despite the lack of growth, Buffett remains steadfast in his decision not to sell these shares, attributing his loyalty to American Express's strong consumer reputation and unique business model. The company functions as a payment network, consumer bank, and payment processor, and offers premium services like the Platinum card with a $695 annual fee. This strategy has attracted over 3 million new cardholders since 2022.
The company's dividend yield has increased to 1.61%, a record high since the market meltdown in March 2020. Meanwhile, its forward price-to-earnings ratio has slipped below the market average to 13.5. Card transactions form 58% of revenue with a 9% YoY growth in payment volume last quarter.
Over the past decade, American Express has seen a 239% dividend growth. Despite the recent stagnation, the company anticipates an earnings per share (EPS) of at least $11 and aims for a 10% revenue increase from 2024 onwards.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.