Assessing the Upcoming Dividend and Historical Performance
American Express Co (AXP, Financial) recently announced a dividend of $0.7 per share, payable on 2024-05-10, with the ex-dividend date set for 2024-04-04. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into American Express Co's dividend performance and assess its sustainability.
What Does American Express Co Do?
American Express is a global financial institution, operating in about 130 countries, that provides consumers and businesses charge and credit card payment products. The company also operates a highly profitable merchant payment network. Since 2018, it has operated in three segments: global consumer services, global commercial services, and global merchant and network services. In addition to payment products, the company's commercial business offers expense management tools, consulting services, and business loans.
A Glimpse at American Express Co's Dividend History
American Express Co has maintained a consistent dividend payment record since 1985. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down American Express Co's Dividend Yield and Growth
As of today, American Express Co currently has a 12-month trailing dividend yield of 1.06% and a 12-month forward dividend yield of 1.24%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, American Express Co's annual dividend growth rate was 11.70%. Extended to a five-year horizon, this rate decreased to 9.40% per year. And over the past decade, American Express Co's annual dividends per share growth rate stands at an impressive 10.20%.
Based on American Express Co's dividend yield and five-year growth rate, the 5-year yield on cost of American Express Co stock as of today is approximately 1.66%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, American Express Co's dividend payout ratio is 0.21.
American Express Co's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks American Express Co's profitability 7 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. American Express Co's growth rank of 7 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and American Express Co's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. American Express Co's revenue has increased by approximately 22.20% per year on average, outperforming approximately 76.75% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, American Express Co's earnings increased by approximately 43.20% per year on average, outperforming approximately 82.52% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 10.30%, outperforms approximately 63.32% of global competitors.
Next Steps
In conclusion, the combination of American Express Co's consistent dividend payments, robust dividend growth rate, prudent payout ratio, strong profitability, and solid growth metrics paints a promising picture for value investors. The company's financial health and strategic market position suggest that it is well-equipped to continue rewarding shareholders with dividends in the foreseeable future. As investors consider the upcoming dividend payment, they should also factor in the company's ability to sustain and potentially increase its dividend distributions over time, making it a potentially attractive option for those seeking income-generating investments. For those interested in exploring further, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
