American Express Co. (NYSE: AXP) has been an unexciting stock for quite some time. That being said, Amex has moved above and beyond the loss of its Costco deal and other brand woes. Its shares have recovered handily from the Great Recession, but the reality is that this stock has not fully recovered from where it peaked in the mid-$90s back in the summer of 2014.
Now Amex is looking for a new enticement to lure new shareholders — with another dividend hike.
American Express is increasing its quarterly dividend to $0.35 per share payable on November 10, 2017, to shareholders of record on October 6, 2017. This is a $0.03 per quarter hike, and it is the same three-cent hike we have seen in the past few years. In percentage terms, this is roughly a 9% dividend hike.
For new investors, based on an $88.60 share price, the $1.40 annualized dividend per share will generate a yield of almost 1.6%. Sadly, that just is not all that impressive for a Dow Jones Industrial Average stock. It is also not that impressive for a financial giant, at least not on the surface.
At the current time, Amex has the fourth lowest dividend yield among the Dow Jones Industrial Average’s 30 companies. The new yield still will be twice that of rival Visa and is better than financial giant Goldman Sachs, but their business models are quite different.
Below is the current yield for each financial giant that is a member of the Dow (based on existing payouts that have been made):
- Visa, 0.64%
- Goldman Sachs, 1.30%
- Amex, 1.45%
- Travelers, 2.35%
- JPMorgan, 2.38%
While American Express may have been an unexciting stock for some time, things are still looking better than many investors may have expected at the start of 2017. Amex’s total return has been 19% so far in 2017, and that is eighth best of the 30 Dow stocks — and ranks only behind Visa in the financial players with a 32% year to date gain.
If there is one shareholder who is extremely happy here with Tuesday’s announcement, look no further than Warren Buffett of Berkshire Hathaway Inc. (NYSE: BRK-A). It turns out that a stake purchased long ago has made Berkshire Hathaway the largest single holder of American Express. The conglomerate owns a whopping 151,610,700 shares, and that’s a stake of about 17.1%. This new dividend payout will bring in just over $212 million in dividend income over the next 12 months that Berkshire Hathaway can use to bolster its ongoing efforts to grow through time.