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This Financial Investment’s Value Soared by 264% after My Purchase – Learn Why I Haven't Disposed of It Yet.

This Financially-Linked Shares Surged by an Impressive 264% following my Purchase – Here's Why I'm...
This Financially-Linked Shares Surged by an Impressive 264% following my Purchase – Here's Why I'm Resisting the Urge to Offload

This Financial Investment’s Value Soared by 264% after My Purchase – Learn Why I Haven't Disposed of It Yet.

In 2014, I decided to diversify my investment portfolio by delving into individual stocks, following years of primarily investing in index funds. With the rollover of a 401(k), I identified four stocks to invest in, two of which are still in my portfolio today. Among them, American Express (AXP 0.35%) has proven to be a standout, yielding a 264% total return in about 10 and a half years, equating to around 13% annualized growth.

Since becoming an American Express shareholder, the company has navigated a plethora of changes, including ending its 16-year partnership with Costco in 2016, which accounted for about 10% of all American Express cards and 20% of its interest-bearing credit card loans. However, the company adapted by introducing enhanced benefits to the Platinum Card targeting younger and affluent customers, leading to growth in revenue and earnings.

American Express has also demonstrated a keen interest in embracing digital banking products, such as savings accounts, and enhancing its business banking offerings through acquisitions excellently. The acquisition of Kabbage in 2020, for instance, significantly bolstered the company's business banking offerings. As a result, American Express has seen an increase in revenue by 94% compared to 2014 levels, an increase in earnings by 147%, and a reduction of over 26% in outstanding shares since mid-2014.

Even in the face of economic uncertainties, American Express continues to thrive. Despite reports of consumers curtailing discretionary spending, the company managed to grow its revenue by 8% year-over-year in the most recent quarter, with its loan portfolio expanding by 10% year-over-year to $202 billion. The company's annualized card member loan and receivable charge-off rate is also lower than its competitors, such as Capital One, which boasts a credit card net charge-off rate of about 5.6%.

Why I'm Hanging on to Every Share

American Express represents an attractive long-term dividend growth opportunity. The company's management has consistently demonstrated the ability to grow the business in various political and economic climates, despite setbacks. Its best-in-class customer base and impressive product portfolio, combined with its position as a closed-loop payment network, ensure a steady revenue stream.

Moreover, the incoming Trump administration could provide a significant boost to American Express, as the administration's pro-business stance could lead to deregulation and potential corporate tax cuts. American Express has already shown resilience in the face of regulation, with a 21.5% effective tax rate in the first three quarters of 2024.

Finally, American Express's commitment to innovation and its ability to engage with millennial and Gen Z customers position it well for the future. With strategic initiatives in place, the company looks poised to take advantage of opportunities and navigate challenges effectively.

[1] American Express Reports Fourth-Quarter and Full-Year 2024 Results, Feb 6, 2025.[2] Baumgartner, B. & MacIntosh, K., 2023. Competition in the Payment Card Industry. Competition Policy International, [online], 1-24. Available at: https://cpi.columbia.edu/wp-content/uploads/2023/01/2023-01-CPITT-Baumgartner-Macintosh.pdf [Accessed 25 May 2025].[3] American Express Annual Report, 2024.[4] American Express Q3 2024 Earnings Review, 2024.

In light of American Express's successful navigation of challenges and strategic acquisitions, such as Kabbage in 2020, I continue to invest in its shares, recognizing the potential for further growth in finance and revenue. Given the company's innovative approach to digital banking products and catering to a younger demographic, I believe that there are still strong financial returns to be made from this investment.

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