Prediction: This Dividend-Paying Dow Jones Growth Stock Will Beat the S&P 500 For the 6th Consecutive Year in 2026

American Express (AXP) reported strong earnings, propelling its stock to an all-time high and outperforming the S&P 500 year-to-date. The company posted an 11% increase in revenue net of interest expense and a 19% rise in diluted EPS, subsequently raising its 2025 forecast to 9-10% revenue growth and EPS of $15.20-$15.50. This robust performance is driven by an 8% increase in card member spending, particularly from its affluent customer base which demonstrates resilience to broader economic pressures, and the successful launch of refreshed Platinum cards, underscoring AXP's differentiated business model and growth potential.

Analysis

American Express (AXP) delivered a blowout earnings report, propelling its stock to an all-time high and a 20% year-to-date gain, significantly outperforming the S&P 500. The company reported an 11% increase in revenue net of interest expense and a 19% rise in diluted earnings per share, subsequently raising its full-year 2025 forecast to 9-10% revenue growth and EPS of $15.20-$15.50, indicating approximately 15% earnings growth. This robust outlook underscores management's confidence in continued strong performance.

The strong results are primarily driven by an 8% foreign exchange-adjusted increase in card member spending, attributed to robust retail engagement and a travel rebound. The successful launch of refreshed Platinum cards also saw initial customer demand exceeding expectations, further boosting engagement. AXP's credit performance remained excellent, characterized by low net write-off rates, showcasing effective risk management.

AXP's integrated business model, which issues its own cards and collects processing fees, provides a distinct advantage over pure-play processors like Visa and Mastercard, offering greater growth potential. By catering to an affluent customer base, AXP demonstrates resilience against broader economic pressures, as this segment is less impacted by rising interest rates and living costs. This strategy fosters high customer loyalty and generates substantial transaction fee revenue.

Despite tripling over the past five years, AXP shares are considered a solid buy for 2026, trading at a less expensive valuation than its peers. The company generates significant free cash flow, enabling substantial stock repurchases and a rapidly growing dividend, which has doubled in the last five years, further enhancing shareholder value.

Key Decisions for Investors

• Investors should consider American Express's strong fundamental performance and positive guidance, driven by resilient affluent consumer spending and effective product innovation.
• Monitor ongoing card member spending trends and credit quality metrics for sustained performance, particularly given the current economic environment.
• Evaluate AXP's relative valuation against peers like Visa and Mastercard, factoring in its differentiated business model and consistent capital returns through dividends and buybacks.