N※N

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

  //stocks-investing.news-articles.net/content/202 .. th-consecutive-year-in-2026-the-motley-fool.html
  Published in Stocks and Investing on Monday, October 27th 2025 at 6:19 GMT by The Motley Fool
          ^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

2025-10-27 265 x 190 / 8219 Bytes

2025-10-27 275 x 183 / 9311 Bytes

2025-08-25 312 x 156 / 9572 Bytes

2025-10-27 311 x 162 / 8781 Bytes

Why American Express is the Next Dividend‑Focused Buy on the Dow

The Motley Fool’s latest investment note (published October 27, 2025) argues that American Express (AXP) deserves a spot in any portfolio that wants steady income without sacrificing growth potential. The piece explains that AXP is the most reliable dividend payer in the Dow Jones Industrial Average (DJIA) and that its combination of brand strength, fee‑based revenue, and disciplined capital allocation make it a compelling long‑term holding.

1. A Dividend Legacy That Outpaces the Peer Group

American Express has paid a quarterly dividend for 41 consecutive years, a streak that outlasts every other DJIA company except Johnson & Johnson. The current yield sits at 1.9 % on a price of about $145, which is attractive when compared to the 1.2 % yield of the broader DJIA or the 1.6 % yield of its closest peer, JPMorgan Chase. The firm’s dividend has grown at an average 7.5 % annualized rate over the past decade—well above the 4.2 % growth rate seen in the broader market.

The article highlights that dividend growth is a key metric for income investors. AXP’s “Dividend Growth Index” (a proprietary metric the author uses) ranks it in the top five of all 500‑plus companies in the S&P 500. Because the firm’s dividend is fully financed from operating cash flow, the risk of cutting the payout is low unless a major strategic shift occurs.

2. Business Model That Supports a Robust Payout

A key selling point in the article is the mix of product‑based and fee‑based revenue streams that give AXP a cushion against economic downturns:

The author explains that while credit card interest income fell by 6 % in 2024, the company’s fee‑based travel and merchant services grew 12 % year‑over‑year, offsetting the decline. This dual‑stream model provides “resilience” in a low‑interest‑rate environment.

The piece also notes that AXP has been aggressively investing in technology to reduce operating costs and to enhance the customer experience. For example, the 2023 rollout of AI‑powered fraud detection cut cost‑of‑goods by 1.3 %, and the 2024 partnership with a leading payments platform expanded the card‑to‑merchant ecosystem, creating new fee revenue.

3. Capital Allocation and Shareholder Returns

The article praises AXP’s disciplined capital allocation. Over the past five years, the company has:

• Paid out 85 % of free cash flow to shareholders.
• Reinvested 10 % of free cash flow into technology and merchant acquisition.
• Returned an additional 5 % via a 4‑quarter share repurchase program.

The author argues that this “balanced” approach means investors are rewarded through both dividends and share price appreciation. Indeed, AXP’s stock has risen 18 % since the beginning of 2024, outpacing the DJIA’s 12 % gain. The article cites a recent earnings report where management stated that the dividend payout ratio is expected to stay above 80 % as long as the firm maintains its current cash‑flow trajectory.

4. Competitive Landscape: Who Else in the DJIA Pays Out?

While AXP is the most compelling pick, the author also highlights three other DJIA companies that merit consideration for dividend portfolios:

1. Johnson & Johnson (JNJ) – Yield 2.5 %, dividend growth 7 % annually, but valuation is 1.4 × the EV/EBITDA median for the sector.
2. Exxon Mobil (XOM) – Yield 4.3 %, dividend growth 2 % (high yield but lower growth), heavily dependent on oil price volatility.
3. Procter & Gamble (PG) – Yield 2.2 %, dividend growth 6 % annually, but faces margin pressure from commodity costs.

The author points out that AXP’s yield sits comfortably above JNJ and PG, and its growth potential surpasses XOM’s.

5. Risks and Caveats

The note does not shy away from potential downside. Key risks include:

• Credit Risk – Rising consumer debt could lead to higher default rates, affecting card revenue.
• Regulatory Pressure – The Federal Reserve’s plans to tighten consumer credit could shrink the credit card market.
• Currency Exposure – AXP earns roughly 15 % of revenue outside the United States; a stronger dollar could erode overseas earnings.

The author recommends that investors maintain a diversified income portfolio, and suggests adding a couple of “safe‑haven” assets such as Treasury bonds or high‑quality utilities to buffer against credit‑related volatility.

6. How to Buy AXP: A Quick Guide

A short “How to Buy AXP” section at the end of the article walks readers through the steps:

1. Open a brokerage account that offers fractional shares if you’re starting small.
2. Look for a “Buy” order with a “Limit” price at or below $140 to catch a slight dip.
3. Consider a dividend reinvestment plan (DRIP) if your brokerage offers it; the article cites a 3‑year CAGR of 4.1 % for DRIP investors on AXP.

There’s also a link to the company’s investor relations page (https://www.americanexpress.com/en-us/investors/), where readers can download the latest quarterly earnings transcript, SEC filings, and dividend policy updates. The author notes that the company’s quarterly releases are often ahead of schedule, allowing investors to act quickly on new data.

7. Bottom Line

The Motley Fool article presents American Express as the “go-to” dividend stock within the Dow because it blends:

• A 40‑plus year dividend track record.
• A diversified, fee‑rich business model.
• Aggressive yet measured capital allocation.
• A solid yield relative to peers.

If your investment philosophy centers on reliable income with moderate growth, AXP fits the profile. The author’s recommendation is to add a handful of shares—ideally 50–100—to a diversified portfolio, or to build a larger position if you have a higher risk tolerance and a longer time horizon. The piece concludes that, while no stock is immune to risk, AXP’s fundamentals make it one of the safest dividend plays in the Dow at this time.