American Express (AXP) plans to boost its dividend by 11%.
The company's board on Monday declared a quarterly payout of 39 cents a share, up from 35 cents. American Express stock, which yields 1.3%, has returned 26.4% in the past year, outpacing the S&P 500 by about seven percentage points.
The credit card giant suffered a big setback when its relationship with Costco Wholesale (COST) ended. American Express had offered a co-branded card with the retailer.
The company earned $5.65 in 2016, up 5% from the previous year, and $5.87 in 2017. American Express paid out $1.34 of dividends last year for a payout ratio of 23%, suggesting plenty of more upside for future dividend hikes.
Analysts expect the company to earn $7.27 a share this year.
A higher dividend isn't the only reason to be bullish on the stock. In a note Tuesday, Bill Carcache of Instinet Equity Research wrote that the company is "focused on improving the digital lives" of its customers. Its various initiatives include testing blockchain technology. He has a Buy on the stock with a price target of $128, about 15% above its current price.
Read more : 6 Tech Stocks With Solid Dividends
The company recently tapped Patrick Franklin as its new chief technology officer. Franklin is a seasoned executive whose resume includes working at Microsoft (MSFT), Amazon.com (AMZN) and Google parent Alphabet (GOOGL).
The quarterly disbursement is payable on Nov. 9 to shareholders of record on Oct. 5.
Follow @lawlcs
Write to Lawrence C. Strauss at lawrence.strauss@barrons.com
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
