Dividend stocks can be quiet wealth-builders. The income doesn’t arrive with fanfare but shows up quarter after quarter, while compounding over time. That’s a powerful reality that Warren Buffett learned a long time ago.
Dividend stocks are widely considered a foundational building block for creating a retirement portfolio, offering a reliable income stream and potential for long-term growth.
That’s precisely why the Oracle of Omaha has held one particular financial stock for decades and why the math behind that position has quietly become extraordinary.
Warren Buffett’s Berkshire Hathaway owns 151.6 million shares of American Express, a 22.1% stake in the company. At AXP‘s current annualized dividend of $3.80 per share, that amounts to roughly $576 million in dividend income each year.
A 176-year-old dividend stock is a Warren Buffett favorite
American Express (AXP) was founded in 1850. That’s older than the light bulb, the telephone, and the automobile.
The company started as an express mail business and eventually evolved into one of the world’s most recognized financial brands.
Today, AXP operates as an integrated payments company with four main segments: U.S. Consumer Services, Commercial Services, International Card Services, and Global Merchant and Network Services.
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It issues credit and charge cards, offers travel and lifestyle products, provides banking services, and processes transactions across a global merchant network of roughly 170 million locations.
The business has a distinct advantage: it operates a largely closed-loop network, meaning it acts as both the card issuer and the merchant acquirer in most transactions.
That structure gives it tighter control over data, economics, and customer relationships than traditional four-party networks.
Buffett’s $576M dividend haul is widening
The number that should catch your eye isn’t just how much AXP pays but how fast those payments have been growing.
AXP paid out$3.41 in dividends per share over the past 12 months, representing an increase of nearly 16% from the prior year.
Its three-year dividend CAGR of 16.59% ranks in the top 25% of its industry.
American Express CFO Christophe Le Caillec, speaking at the UBS Financial Services Conference in February 2026, pointed to the company’s “premium” strategy as the engine behind this consistent growth.
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“The spend has been very strong and very consistent,” Le Caillec said. “We are blessed to have such a strong, stable, confident customer base, which is the core of our financial performance.”
He also highlighted the card fee line, a key driver of revenue. The company’s card fees have grown at a 17% CAGR since 2018-2019, and management expects that line to exit 2026 at a high-teens growth rate, lifted by the recent Platinum Card refresh.
Key dividend metrics for AXP stock:
- Annualized dividend per share: $3.80
- Quarterly dividend per share: $0.95
- Dividend yield: approximately 1.2%
- Payout ratio: roughly 21%
- 5-year dividend CAGR: 17.15%
The payout ratio is the standout figure here. At around 21%, AXP is returning only a small share of its earnings as dividends, which suggests there’s a long runway for further increases.
Wall Street’s take on AXP as a dividend stock
The analyst community has a mixed-to-positive view of AXP right now. Based on 17 Wall Street analysts, AXP stock has a median price target of $353, with estimates ranging from $280 to $425.
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The bull case for the blue-chip dividend stock rests on several pillars.
- American Express has delivered strong billings growth of 7-8% percent through 2025.
- Management is targeting mid-teens earnings per share (EPS) growth over the long term, with younger consumers boosting new card sign-ups.
Le Caillec put it plainly at the UBS conference:
“When I look at the quality of the card member base, the momentum we have, the incredible strong strength of their credit profile……it gives me a lot of confidence in the compounding aspect of our business.”
That compounding is exactly what Buffett has been banking on for decades.
$576M in dividends is just the beginning
Berkshire Hathaway’s cost basis on its AXP stake is believed to be far below the current market price: meaning the effective yield on Buffett’s original investment is far higher than the 1.2% yield the stock shows today.
That’s the power of holding a quality dividend stock through cycles of growth. The yield on cost climbs higher with every dividend increase, even as the stock price rises.
American Express has increased its dividend for five consecutive years, and dividend payments per share have grown an average of 17.14% over the past 12 months and 16.40% over the past three years.
In fact, the annualized dividend payout has risen from $0.48 per share in 2006 to $3.80 per share in 2026.
AXP’s low payout ratio of roughly 21% means the company retains the vast majority of its earnings, while reinvesting in technology, product refreshes, and international expansion.
Le Caillec noted that the operating expense ratio to revenue dropped by 4 percentage points over the past three years, from 26% to 22%, driven largely by technology investment.
Simply put: American Express is a business getting stronger, not weaker. And with over 151 million shares sitting inside Berkshire Hathaway, Warren Buffett is collecting roughly half a billion dollars a year to wait.
For dividend stock investors looking for a model to study, it doesn’t get much cleaner than that.
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