American Express Company (AXP): A Bull Case Theory

We came across a bullish thesis on American Express Company on Rijnberk InvestInsights’s Substack by Daan | InvestInsights. In this article, we will summarize the bulls’ thesis on AXP. American Express Company’s share was trading at $320.92 as of July 14^th. AXP’s trailing and forward P/E were 22.31 and 21.10 respectively according to Yahoo Finance.

American Express (AXP) stands out as a premium financial services brand with a structurally advantaged, closed-loop payments network that allows it to monetize both sides of a transaction, earning merchant fees and interest from cardholders. This unique model, combined with its focus on affluent consumers and businesses, gives AmEx a highly resilient and diversified revenue base. Its premium clientele spends more, churns less, and values loyalty programs and travel perks, leading to strong pricing power, high returns on equity, and reliable earnings even during downturns.

The company’s underwriting discipline, centered on prime borrowers, helps insulate it from rising delinquencies, supporting the longevity and defensiveness of its business model. With room for global expansion—especially in markets dominated by Visa and Mastercard—alongside a renewed push into small business lending and co-branded cards, AmEx has credible growth levers to support mid-teens earnings growth.

Its dividend growth story further reinforces the investment case: a modest 1.1% yield backed by a conservative 21% payout ratio, 12% five-year dividend CAGR, and a fortress balance sheet provide ample room for sustained growth. For long-term investors, the compounding potential is substantial. A historical example illustrates this: an investor buying AXP in 2005 would now enjoy an 8% yield on cost, reflecting the transformative effect of compounding dividend growth.

AmEx thus exemplifies the rare mix of a premium brand, defensive fundamentals, and strong secular growth potential, making it a top-tier pick for dividend growth and long-term wealth compounding, much like Buffett’s legendary Coca-Cola investment.

Previously we covered a bullish thesis on American Express Company (AXP) by Max Dividends and Serhio MaxDividends in May 2025, which highlighted its integrated model, premium clientele, and strong capital returns. The company’s stock has appreciated ~8.3% since our coverage as the thesis played out. Daan | InvestInsights shares an identical view but emphasizes the dividend compounding potential.

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Disclosure: None.