Will American Express Company (AXP) Hike Its Dividend? – Capital One Financial Corp. (COF), The Bank of New York Mellon Corporation (BK)

Stress-test results have been saturating the media this week as the big banks show off their hearty capital reserves and ability to withstand an economic pseudo-armageddon. Though this was the third annual test, the Fed added some of Dodd-Frank’s regulations into the mix, prompting the announcement of the first phase, the stress test, on March 7 — to be followed by the Comprehensive Capital Analysis and Review results this Thursday.

American Express Company (NYSE:AXP)Although banks — particularly big banks — have been the focus of media attention, any entity considered a bank holding company is subject to this yearly scrutiny. Two institutions that fit this description are Capital One Financial Corp. (NYSE:COF) and American Express (NYSE:AXP) , though both are often thought of as primarily credit card issuers. Both of these companies passed the recent stress test easily, though American Express bested Capital One Financial Corp. (NYSE:COF)’s 7.4% projected minimum Tier 1 common ratio with an 11.1% post-severely adverse-scenario capital cushion.

Source: Dodd-Frank Act Stress Test 2013: Supervisory Stress Test Methodology and Results.

Should American Express ask for a dividend increase or share buyback?
With such an impressive showing on the stress test, it seems almost certain that American Express will request — and will be allowed to bestow — a larger dividend, as well as institute a share buyback program. Indeed, only the two large custody banks, The Bank of New York Mellon Corporation (NYSE:BK) and State Street Corporation (NYSE:STT) had higher common ratios than American Express. Considering that big regional bank BB&T Corporation (NYSE:BBT) , which analysts had pegged as one of the more highly capitalized institutions, scored a 9.4% ratio, AmEx’s results are all the more impressive.

Following the stress test last year, AmEx embarked upon a share repurchase program to the tune of $4 billion in 2012, reserving another $1 billion in buybacks for the current quarter. The company also announced a boost in the quarterly dividend to $0.20 from $0.18 per share.

How much will AmEx share with investors?
Will American Express be a little more generous this year? It certainly seems like it could afford to be. The company has many irons in the fire, and has recently begun exploring the social media side of credit card purchasing through a new deal with Twitter. As Fool analyst Dan Caplinger has noted, the company could easily bump up that payout quite a bit without feeling a pinch.

Certainly, with such a stellar financial checkup under its belt, AmEx could afford to be magnanimous with its investors — provided it stays under the Fed’s comfort level of less than 30% of estimated after-tax net income. Soon, we’ll know just how benevolent they plan to be.

The article Will American Express Hike Its Dividend? originally appeared on Fool.com and is written by Amanda Alix

Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends American Express.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!