American Express raised its quarterly dividend by 16 percent to $0.95 per share in early 2026, reflecting a 15 percent jump in adjusted earnings during 2025. The credit card giant, a longtime holding of Berkshire Hathaway, also returned $5.3 billion to shareholders through stock buybacks last year. The combined capital return program signals confidence in the company’s premium card strategy even as consumer spending patterns shift and competitors like Visa and Mastercard continue to dominate transaction volume globally.
The numbers behind the dividend hike
American Express reported adjusted earnings of $15.38 per share for full-year 2025, up from roughly $13.37 in 2024. Revenue growth was driven by higher card member spending, increased merchant network fees, and a resilient travel and entertainment segment that has recovered strongly from pandemic lows. The company expects 2026 earnings to climb another 15 percent to a range of $17.30 to $17.90 per share if spending trends remain stable.
| Metric | Figure |
|---|---|
| New quarterly dividend | $0.95 per share (+16%) |
| Annual dividend (new rate) | $3.80 per share |
| Approximate yield | 1.2% |
| 2025 adjusted EPS | $15.38 (+15%) |
| 2026 EPS guidance | $17.30 – $17.90 |
| 2025 total shareholder returns | $7.6B ($2.3B dividends + $5.3B buybacks) |
The dividend yield of approximately 1.2 percent is modest compared to many income stocks. However, a 16 percent increase in a single year is aggressive by any standard. Companies that raise payouts at double-digit rates often create substantial long-term income growth for shareholders who reinvest or hold through retirement. An investor who owns 1,000 shares of AXP will now collect $950 per quarter instead of $820, an extra $520 annually in cash income.
Why Berkshire Hathaway keeps buying
Warren Buffett’s Berkshire Hathaway owns roughly 20 percent of American Express, making it one of the firm’s largest equity positions. Buffett has praised the company’s durable brand, pricing power, and affluent customer base. In an era where fintech competitors are challenging legacy payment networks, American Express has maintained its position by targeting high-spending card members who value travel perks, concierge services, and airport lounge access.
The earnings trajectory supports this thesis. A company growing earnings at 15 percent annually while returning the majority of free cash flow to owners is rare in the financial sector. Bank stocks often face regulatory capital constraints that limit dividend flexibility. American Express operates under different rules as a card network and lender, giving it more room to reward shareholders while maintaining reserve capital for credit losses.
Buffett has held American Express for decades, through multiple economic cycles and competitive threats. The position has been a cornerstone of Berkshire’s equity portfolio, and the dividend increase validates the long-term holding strategy. For income investors who follow the Berkshire model, AXP offers a combination of dividend growth, share buybacks, and capital appreciation that few financial stocks can match.
What income investors should watch
At a 1.2 percent yield, American Express is not a traditional income play. Retirees seeking immediate cash flow may prefer utilities or REITs yielding 4 to 6 percent. But for investors with a 10-year horizon, the dividend growth rate matters more than the starting yield. A stock that raises its payout 16 percent per year will double its dividend in roughly 4.5 years. That compounding effect can transform a modest yield into a substantial income stream over time.
Risks include a recession-driven drop in consumer spending, rising credit losses if unemployment climbs above 5 percent, and regulatory pressure on interchange fees from legislators in both parties. American Express also carries higher customer acquisition costs than Visa or Mastercard, which could compress margins if competition intensifies. Investors should watch Q2 2026 earnings for guidance updates, credit loss trends, and any changes to reserve ratios.
Another concern is the stock’s valuation. AXP trades at roughly 20 times forward earnings, a premium to many large-cap banks. If earnings growth slows, multiple compression could offset dividend gains. Conservative investors should consider position sizing carefully and avoid treating AXP as a pure income replacement for bonds or higher-yielding equities.
Stay ahead with our weekly newsletter
Get stock picks, market analysis, and strategy updates delivered to your inbox every week. We focus on dividend growth, income safety, and the data that drives long-term returns.
Subscribe to AlphaBetaStock’s free newsletter for daily market insights tailored to conservative investors.
