American Express Stock Takes a Hit
Shares of American Express (NYSE: AXP) have dropped about 20% since the start of 2026, recently hovering around $300. This decline is largely attributed to broader market worries regarding economic challenges and geopolitical tensions, which seem to be unnerving investors.
However, for those with a long-term view, this price drop might actually be an inviting opportunity. Despite the downturn, American Express has been performing quite well internally, boasting strong revenue growth and a commitment to shareholder returns.
American Express finished 2025 on a high note, having reported its latest financial results in late January. The company saw a 10% increase in annual sales, reaching $72.2 billion, with earnings per share climbing to $15.38, a 15% rise compared to the previous year.
The fourth quarter of 2025 was particularly noteworthy, with revenue rising 10% to $19 billion and earnings per share jumping 16%. This performance reflects robust consumer spending; the company’s billing business grew 9% year-over-year to $445.1 billion.
American Express has a solid business model that generates significant cash flow, and its management is focused on sharing that cash with investors. In March, the board approved a 16% increase in its quarterly dividend, now set at $0.95 per share, offering a yield of about 1.3% at the present time.
This increased dividend is underpinned by strong cash flow. The new annual dividend of $3.80, based on adjusted earnings per share for 2025, represents a payout ratio of less than 25%, leaving ample room for future dividend growth even if earnings slow momentarily.
The company’s capital return program extends beyond just dividends. In 2025, American Express returned $7.6 billion to shareholders, with about $2.3 billion allocated to dividends and nearly $5.3 billion spent on share buybacks. This significant buyback program decreased the company’s share count by roughly 2%, directly enhancing earnings per share.
So what’s driving this consistent growth for American Express? A significant factor is the company’s strong pricing power, which allows it to refresh its premium offerings while maintaining and attracting new members, especially younger consumers.
For instance, last September, American Express revamped its flagship Platinum card, increasing the annual fee by almost 30% to $895. To justify this hike, they introduced several new lifestyle benefits, appealing to Millennials and Gen Z—demographics that are increasingly interested in premium travel perks.
That said, it’s crucial to acknowledge the risks associated with any investment. A sudden economic downturn could affect consumer spending, which in turn would impact trading fees. Furthermore, American Express’ exposure to loans might amplify these effects.
Current stock prices seem to accommodate these risks reasonably well. As of now, shares are trading around $300, roughly 17 times the midpoint of the management’s 2026 earnings forecast of $17.30 to $17.90 per share—an attractive price-to-earnings ratio for a well-established financial company.
Overall, I believe this recent decline in share price offers a favorable entry point for investors. If you’re seeking a resilient financial institution with solid pricing power, aggressive buybacks, and a growing dividend, American Express appears to be a strong stock to consider for the long term.
Before making a purchase, it’s worth considering the broader context. Some analysts have identified other stocks with potential for impressive returns—but American Express is definitely an option to keep an eye on.
