Core Viewpoint - American Express is highlighted as a strong dividend stock, offering sustainable income through dividend growth, especially during market volatility [1][2]. Group 1: Company Overview - American Express was founded in 1850 and has evolved significantly since launching its credit card line in 1958, becoming one of the largest credit card issuers in the U.S. and globally [3]. - As of the end of Q1, American Express had approximately 147.5 million credit cards in circulation, adding 3.4 million net new cards in the quarter, indicating potential future earnings growth [4]. Group 2: Customer Demographics - Millennials and Gen Z are increasingly drawn to American Express credit cards, accounting for 35% of spending last quarter, with a year-over-year growth of 14%, representing the future customer base for the company [5]. Group 3: Financial Metrics - American Express maintains strong credit metrics, with a net write-off rate of 2.1%, significantly lower than the 5% rate of competitor Discover Financial, suggesting resilience during economic downturns [6]. - Over half of American Express' revenue comes from swipe fees, with an additional 14% from annual fees, contributing to more stable earnings compared to traditional banks [7]. Group 4: Dividend Growth - The company has experienced a 152% growth in earnings per share (EPS) over the last decade, alongside a cumulative 120% increase in dividend per share, with a recent 17% hike in the quarterly dividend [9]. - The current dividend yield stands at 1.09%, with expectations for growth based on the cost basis for new investors [9]. Group 5: Share Buyback Program - American Express has reduced its shares outstanding by 30% over the last 10 years through a share buyback program, enhancing the ownership stake of existing shareholders [10]. - This reduction in shares outstanding facilitates easier growth in dividend payouts, making American Express an attractive option for long-term investors [11].

Core Viewpoint - Berkshire Hathaway holds a significant stake in American Express, valued at $37 billion, indicating potential for continued success in the financial sector [1] Group 1: Competitive Strengths - American Express possesses durable competitive advantages, characterized by a strong brand and economic moats, making it a high-quality business [3] - The company has a powerful brand presence in the financial services industry, targeting wealthier clients with premium credit cards that offer high rewards and perks [4] - American Express benefits from a network effect, where increased merchant acceptance enhances the value of its cards for consumers, creating a positive feedback loop [5][6] Group 2: Financial Performance - In 2024, American Express reported a 9% increase in revenue, reaching $65.9 billion, and a 19% rise in adjusted earnings per share (EPS) [7] - The company anticipates revenue growth of 8% to 10% and adjusted EPS growth of 12% to 16% in 2025, with long-term sales growth projected at a minimum of 10% per year [7] - Favorable trends, such as the shift towards cashless transactions and rising GDP, are expected to drive payment volume through American Express's network [8] Group 3: Customer Base and Demographics - The customer base is shifting, with millennials and Gen-Z accounting for over 60% of new consumer accounts in Q1, indicating a growing spending trend among these demographics [9] Group 4: Valuation and Capital Return - American Express shares are currently trading 26% below their all-time high, presenting a compelling valuation opportunity with a price-to-earnings (P/E) ratio around 17, one of the lowest in the past year [10] - The company has a strong capital allocation policy, returning $2 billion in dividends and repurchasing $5.9 billion in stock in 2024, enhancing returns for investors [11]

Core Viewpoint - American Express (AXP) may not appear to be a recession-resistant business, but it possesses characteristics that could enable it to endure economic downturns better than its competitors [1] Company Analysis - American Express has an affluent clientele, which provides a buffer against economic challenges [1] - The company maintains excellent asset quality, contributing to its resilience in adverse economic conditions [1]

Core Viewpoint - American Express is highlighted as a strong investment opportunity, particularly for those looking to invest $1,000, due to its durable competitive advantages and solid financial performance over time [1]. Group 1: Economic Moat and Competitive Strength - American Express possesses a durable economic moat characterized by its strong brand and premium positioning in the credit card market, attracting wealthier customers [2]. - The company's brand supports its pricing power, allowing it to charge merchants higher fees compared to other card networks and to increase annual fees for customers, with the average fee per card rising to $111 in Q1 2025, a 185% increase over the past decade [3]. Group 2: Financial Performance and Growth - American Express has demonstrated sustainable growth, with revenue and diluted earnings per share (EPS) increasing at compound annual rates of 6.7% and 9.7% respectively from 2014 to 2024 [5]. - The leadership anticipates continued growth, projecting revenue to increase by at least 10% annually and EPS to grow at a mid-teens rate [5]. Group 3: Resilience in Economic Downturns - Despite concerns about a potential recession, American Express's affluent customer base is expected to navigate economic challenges better than average consumers, which may minimize losses for the company [7]. - In Q1 2025, American Express reported a net write-off rate of 2.1%, unchanged year over year, indicating stability in credit quality [7]. Group 4: Recent Spending Trends - The company has observed continued strength in restaurant and lodging spending, although there was a deceleration in airline spending compared to 2024 trends [8]. - American Express experienced a 6% increase in billed business, which measures payment volume, in Q1 2025 [8]. Group 5: Valuation and Investment Opportunity - Despite a challenging market environment, American Express shares have declined 18% in 2025, presenting a potential buying opportunity for long-term investors [10]. - With a price-to-earnings ratio of 16.9, below its historical three-year average, the stock is considered a compelling investment at its current valuation [11].

Market uncertainty has become the defining characteristic of the 2025 investment landscape. Thanks to volatile trade policies, persistent inflation concerns, and geopolitical tensions, investors are facing a challenging environment that demands both defensive positioning and growth potential. During such periods, high-quality dividend stocks offer a compelling combination of current income, downside protection, and long-term appreciation prospects. Blue chip dividend payers have historically demonstrated re ...

Core Viewpoint - American Express (AmEx) maintains its revenue and profit guidance for 2025, supported by a resilient affluent customer base that continues to spend despite macroeconomic challenges [1][3]. Financial Performance - Q1 2025 EPS reached $3.64, exceeding estimates by 5.5% and reflecting a 9% year-over-year increase [3]. - Network volumes for Q1 2025 totaled $439.6 billion, marking a 5% increase year-over-year [3]. - U.S. Consumer Services reported a pre-tax income of $1.7 billion, up 7% year-over-year, while Commercial Services saw a decline in pre-tax income to $836 million, down 5% year-over-year [3]. - Revenue guidance for 2025 is reaffirmed at an 8-10% growth from $65.9 billion in 2024, with EPS guidance set at $15-$15.50, up from $13.35 in 2024 [3]. Market Estimates - The Zacks Consensus Estimate predicts a 13.9% year-over-year increase in AmEx's 2025 earnings, with 2026 earnings expected to grow by 14.5% [5]. - Revenue estimates for 2025 and 2026 indicate year-over-year growth of 8.5% and 8.4%, respectively [5]. - AmEx has a history of surpassing earnings expectations, with an average surprise of 5.2% over the past four quarters [5]. Stock Performance - Over the past month, AXP shares have declined by 9.1%, aligning with the broader industry downturn, yet outperforming both the industry average and the S&P 500 Index [6]. - Competitors Visa and Mastercard experienced smaller declines due to lower exposure to credit risk compared to AmEx [6]. Valuation Insights - AmEx is trading at a forward P/E ratio of 15.84X, above the industry average of 13.98X, indicating strong investor confidence [8]. - Visa and Mastercard trade at higher multiples of 27.39X and 31.51X, respectively, reflecting their different business models and risk profiles [8]. Business Model and Strategy - AmEx's dual role as a credit card issuer and network operator allows it to capture a larger share of transaction economics, contributing to a more profitable business model [9]. - The company is experiencing strong credit performance and operational efficiency, with rising cardmember spending and expanding lending operations [9]. - A 9% year-over-year decline in Q1 provision for credit losses to $1.2 billion suggests improving credit quality and reduced expectations for customer defaults [10]. Spending Trends and Future Investments - Travel and entertainment spending remains robust, particularly in lodging, dining, and entertainment, areas where AmEx is focusing its efforts [14]. - The acquisition of Center enhances AmEx's presence in high-end dining and lifestyle experiences, reinforcing its premium value proposition [14]. - AmEx is targeting Gen Z and Millennials through marketing efforts to build brand loyalty for future growth [15]. Financial Position - At the end of Q1 2025, AmEx had $52.5 billion in cash and cash equivalents, up from $40.6 billion at the end of 2024, with short-term debt at $1.6 billion [16]. - The company returned value to shareholders by repurchasing 2 million shares for $700 million and paying $600 million in dividends during the quarter [16].

Core Insights - Orix (IX) and American Express (AXP) are being compared for their investment value in the Financial - Miscellaneous Services sector [1] - Orix has a Zacks Rank of 1 (Strong Buy) while American Express has a Zacks Rank of 3 (Hold), indicating a stronger earnings outlook for Orix [3] Valuation Metrics - Orix has a forward P/E ratio of 8.02 compared to American Express's forward P/E of 16.58, suggesting Orix may be undervalued [5] - The PEG ratio for Orix is 0.87, while American Express has a PEG ratio of 1.23, indicating Orix's expected earnings growth is more favorable [5] - Orix's P/B ratio is 0.82, significantly lower than American Express's P/B ratio of 5.67, further supporting Orix's valuation as more attractive [6] Investment Grade - Orix's Value grade is A, while American Express's Value grade is C, highlighting Orix as the preferred choice for value investors [6]

Group 1: American Express - American Express is down 15.1% year-to-date, presenting a potential buying opportunity with a price-to-earnings ratio of 18.1 [4] - The company has a diversified customer base, with U.S. consumer services accounting for 38% of worldwide network volumes [6] - American Express has consistently raised its dividend and has never cut it since 1977, returning $7.9 billion to shareholders in fiscal 2024 [10][11] - The company has outperformed Visa, Mastercard, and the S&P 500 over the last five years, indicating strong growth potential [8][12] Group 2: International Paper - International Paper offers a nearly 4% dividend yield and operates in a mature industry with growth prospects from e-commerce packaging [13] - The acquisition of DS Smith positions the company as a global player in the packaging market, aiming for earnings growth through synergies [14][15] - Management projects a long-term growth rate of 3% to 4% in North America and Europe, with potential free cash flow of $2 billion to $2.5 billion by 2027 [16] Group 3: NextEra Energy - NextEra Energy stock is down 7.3% year-to-date, but offers a 3.4% forward-yielding dividend, making it an attractive investment opportunity [17] - The company is the largest electric utility by market cap and has a significant focus on renewable energy, with 40 GW of solar, wind, and energy storage [18] - Despite concerns over tariffs affecting renewable energy projects, NextEra Energy is a regulated utility, ensuring stable returns [20] - The company has maintained an average payout ratio of 81% over the past five years, reflecting a conservative approach to dividends [21] - Shares are currently trading at 10.6 times operating cash flow, below their five-year average multiple of 15, indicating a favorable buying opportunity [23]

Market Reaction - Large-cap financial stocks, including American Express, Blackstone, and Ally Financial, experienced significant declines on Monday, with drops of 4.3%, 7.8%, and 5.1% respectively [1] - The broader market downturn was attributed to concerns over President Trump's comments regarding Federal Reserve Chairman Jay Powell, which were perceived as a threat to the Fed's independence and raised inflation risks [2][6] Trade and Economic Concerns - China issued warnings to countries negotiating trade deals with the U.S., complicating the potential for successful agreements, which are crucial for alleviating economic pressures [3][7] - Ongoing tariff policies pose dual risks of recession and inflation, potentially leading to stagflation [4] Federal Reserve's Position - Fed Chair Jay Powell indicated that the Fed would likely maintain a pause on interest rate cuts due to anticipated inflation from tariffs, which could further weaken the economy [5] - The market reacted negatively to Trump's pressure on the Fed, leading to declines in economically sensitive stocks [6][8] Company-Specific Insights - American Express and Ally Financial could face lower lending activity and increased charge-offs in a recessionary scenario, impacting their performance [9] - Blackstone, while having opportunities to deploy its $177 billion in cash, may struggle with exits from existing investments, affecting its dividend payouts [10][11] Analyst Sentiment - All three companies reported earnings that beat estimates, but the outlook from analysts remains mixed, reflecting high uncertainty due to external economic factors [12][13] - Despite the uncertainty, periods of high volatility may present buying opportunities for long-term investors in high-quality stocks like Blackstone and American Express, which are currently trading at discounted prices [14]

Financial Performance - Total revenues net of interest expense increased to $16,967 million in Q1 2025, up from $15,801 million in Q1 2024, representing a growth of 7.3%[195] - Net income for Q1 2025 was $2,584 million, compared to $2,437 million in Q1 2024, reflecting an increase of 6.0%[199] - Total non-interest revenues rose to $12,798 million in Q1 2025, a 6.4% increase from $12,032 million in Q1 2024[195] - Earnings per share (diluted) increased to $3.64 in Q1 2025 from $3.33 in Q1 2024, representing a growth of 9.3%[195] - Comprehensive income for Q1 2025 was $2,613 million, compared to $2,354 million in Q1 2024, reflecting an increase of 11.0%[199] - Cash dividends declared for common shares were $576 million for the three months ended March 31, 2025, compared to $507 million in the same period of 2024, marking an increase of 13.6%[220] - Total revenues net of interest expense after provisions for credit losses for the three months ended March 31, 2025, were $15,817 million, up from $14,532 million in 2024, an increase of 8.83%[364] - Net income for the three months ended March 31, 2025, was $2,584 million, compared to $2,437 million in 2024, reflecting a growth of 6.04%[360] Assets and Liabilities - Total assets increased to $282,244 million as of March 31, 2025, compared to $271,461 million at the end of 2024, marking a growth of 4.3%[201] - The company’s total equity increased from $30,264 million as of December 31, 2024, to $31,202 million as of March 31, 2025, representing a growth of 3.1%[220] - The total fair value of AFS debt securities was $1.110 billion as of March 31, 2025, down from $1.240 billion as of December 31, 2024[278] - Total financial assets measured at fair value amounted to $1,319 million, compared to $2,246 million as of December 31, 2024, reflecting a decrease of approximately 41.3%[327] - Total liabilities measured at fair value remained constant at $530 million from December 31, 2024, to March 31, 2025[331] Customer Deposits and Loans - The company reported a net increase in customer deposits of $6,973 million in Q1 2025, compared to $5,283 million in Q1 2024[204] - As of March 31, 2025, total customer deposits increased to $146.396 billion from $139.413 billion as of December 31, 2024, representing a growth of approximately 5.1%[294] - Card Member loans decreased slightly to $133,611 million as of March 31, 2025, from $133,995 million at the end of 2024[201] - Card Member loans as of March 31, 2025, totaled $139,203 million, slightly down from $139,674 million as of December 31, 2024, indicating a decrease of 0.3%[221] - The company’s consumer Card Member loans decreased from $107,646 million as of December 31, 2024, to $105,213 million as of March 31, 2025, a decline of 2.3%[221] Credit Losses and Provisions - The company reported reserves for credit losses of $5,592 million for Card Member loans as of March 31, 2025, compared to $5,679 million as of December 31, 2024, showing a reduction of 1.5%[221] - Provisions for credit losses for Card Member loans were $901 million for the three months ended March 31, 2025, compared to $1,014 million for the same period in 2024[267] - The total reserve for credit losses for Other loans increased to $244 million as of March 31, 2025, reflecting growth in Personal Loans and Business Line of Credit offerings[273] - The company established reserves for interest believed to be uncollectible, reflecting a proactive approach to credit risk management[230] Share Repurchase and Dividends - During the three months ended March 31, 2025, the company repurchased a total of 2,270,300 shares at an average price of $297.37 per share[374] - The company has a remaining authorization to repurchase up to 72,900,519 shares under its publicly announced repurchase programs[374] - The company’s Board of Directors authorized the repurchase of up to 120 million common shares on March 8, 2023, replacing the prior authorization[374] Legal Proceedings - The estimated range of possible loss for disclosed legal proceedings is zero to $190 million in excess of any accruals related to those matters[310] - American Express has accrued for certain outstanding legal proceedings, evaluating developments quarterly to adjust the accrual amount as necessary[309] - The company is involved in various legal proceedings, including antitrust claims, which could have a material adverse effect on its business and results of operations[310] Economic Outlook - The U.S. unemployment rate is projected to be between 3% and 8% by the fourth quarter of 2025, indicating potential economic variability[265]