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 - 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].