American Express Co. (NYSE: AXP) is scheduled to release its third-quarter financial results after the markets close on Thursday. The consensus estimates call for $1.76 in earnings per share (EPS) and $10.05 billion in revenue. The same period of last year reportedly had EPS of $1.50 on $8.44 billion in revenue.
Amex announced in September that its board of directors approved a previously announced $0.04 per share increase on its quarterly dividend to its common shareholders. The dividend was raised to $0.39 from $0.35, an 11% increase. The $1.56 annualized dividend per common shares equates to a yield of 1.42%, based on the closing price at the time of $109.85.
The company announced in June that the Federal Reserve did not object to its adjusted capital plan submitted as part of the 2018 Comprehensive Capital Analysis and Review. The dividend hike at the time also included an approved $3.4 billion that could be allocated toward common share buybacks from the third quarter of 2018 through the second quarter of 2019. That approved buyback allowed for Amex to spend up to $1.6 billion for common stock buybacks in 2018 and up to an additional $1.9 billion in the first half of 2019.
The higher dividend will be payable on November 9, 2018, to Amex’s shareholders of record on October 5, 2018.
Amex has one of the lower dividend yields among Dow Jones industrial average stocks, but it also has regulatory restrictions on its ability to raise the dividend and buy back stock. Amex had to hold its dividend steady at $0.18 per common share from 2008 until 2012 because of the recession, but it gradually has raised its payout by a similar amount each year since then. That dividend has now more than doubled since the recession years.
Overall, Amex has outperformed the broad markets, with its stock up about 14% in the past 52 weeks. In just 2018 alone, the stock is up only 5%.
A few analysts weighed in on Amex ahead of the report:
- Wells Fargo has an Outperform rating and a $122 price target.
- Stephens has an Overweight rating.
- DZ Bank has a Buy rating.
- UBS Group has a Buy rating.
- RBC has a Sell rating with an $87 price target.
- BMO Capital Markets has a Market Perform rating with a $106 price target.
Shares of Amex were last seen trading at $104.05, with a consensus analyst price target of $114.69 and a 52-week trading range of $87.54 to $111.77.