AmEx Turns on the Cash Tap: Dividends Boom Amid AI Concerns

American Express Company AXP approved a 16% hike in its quarterly dividend to 95 cents per share from 82 cents previously, following its earlier plan. The new payout will be distributed on May 8, 2026, to shareholders of record as of April 3, 2026. However, the market seems still rattled as Block plans major layoffs, with CEO Jack Dorsey citing AI-driven efficiency. Markets fear broader white-collar cuts could pressure spending, credit growth and even AmEx. While Investor sentiment remains spooked, AmEx’s core business drivers, including affluent consumer spending, strong credit quality and durable revenue streams, aren’t directly threatened by AI efficiencies in the short term.

Based on the March 3 closing price of $307.82, AmEx’s dividend yield stands at 1.23%, below the industry average of 1.76%, suggesting meaningful room for future increases as earnings and cash flows scale. In comparison, Visa Inc. V and Mastercard Incorporated MA currently have dividend yields of 0.84% and 0.66%, respectively.

AmEx’s pace of capital returns has been strong. In 2025, it delivered $2.3 billion in dividends and $5.3 billion in repurchases, a total of $7.6 billion. In 2024, it returned $7.9 billion through dividends and buybacks. Since 2021, its average common shares outstanding declined 11.9%.

Its cash generation is providing the flexibility to keep funding buybacks and growing payouts without straining the balance sheet. In 2025, its operating cash flow rose 31.2% to $18.4 billion. The company ended the fourth quarter with $47.8 billion in cash and cash equivalents, up from $40.6 billion at 2024-end. Short-term borrowing was at $1.4 billion, a manageable level considering its earnings trajectory. With expanding operations, partnerships and focus on capturing new and young members, AmEx’s capacity for shareholder-focused actions will grow further.

Peers’ Shareholder-Friendly Actions

Companies like Visa and Mastercard also have strong capital deployment programs.

In fiscal first quarter 2026, Visa returned $5.1 billion to shareholders, including $3.8 billion in buybacks and $1.3 billion in dividends, with $21.1 billion still authorized for repurchases as of Dec. 31, 2025. Mastercard bought back 6.4 million shares for $3.6 billion in the fourth quarter. Over the period between Jan. 1 and Jan. 26, it bought back another 1.3 million shares for $715 million, and had a remaining repurchase capacity of $16.7 billion.

AmEx’s Price Performance, Valuation and Estimates

Shares of AXP have gained 8.6% over the past year, outperforming the broader industry’s 16.7% decline.

From a valuation standpoint, AmEx trades at a forward price-to-earnings ratio of 17.16X, higher than the industry average of 10.76X. It carries a Value Score of B.

The Zacks Consensus Estimate for AmEx’s 2026 earnings implies a 13.8% rise year over year, followed by 14.5% growth next year.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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