HomeBusinessThis financial stock is up 264% since I bought it. This is...

This financial stock is up 264% since I bought it. This is why I don’t sell

The first time I invested a significant amount of money in individual stocks was in 2014. Up until that point, I had primarily invested in index funds while learning things like stock analysis and asset allocation strategies. To be fair, I had bought small amounts of shares in certain companies since the early 2000s, but I was more than 90% invested in funds.

Then, in early 2014, I rolled over a 401(k) from a former employer and decided it was finally time to buy some larger (for me) positions in individual stocks. I invested in four stocks, two of which are still in my portfolio. Both have delivered positive total returns, but with a total return of 264% in approximately 10 and a half years (approximately 13% annualized), American Express (NYSE:AXP) was the highlight.

A lot has happened in the ten and a half years since I became an Amex shareholder, and not all of it has been good. In 2016, for example, American Express and Costco ended their 16-year partnership, and at the time, Amex’s co-branded Costco credit cards made up about 10% of all Amex cards in circulation and about 20% of interest-bearing credit card loans.

However, there have also been some nice developments. Not long after the Costco partnership ended, Amex revamped its flagship Platinum Card with benefits like free Uber rides aimed at younger, affluent customers. The Platinum Card has been an important growth driver in the years that followed.

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American Express has also done a good job of embracing online banking products such as savings accounts, which provide a cheap source of capital. The 2020 acquisition of Kabbage also significantly enhanced the company’s business banking offering.

Overall, since I bought shares, American Express has increased its revenue by 94% compared to comparable levels in 2014. On the bottom line, profits are up 147%. And through buybacks, Amex has reduced the number of shares outstanding by more than 26% since mid-2014.

Even in the most recent quarter, Amex’s revenue grew 8% year over year, despite significant reports that consumers were putting the brakes on their discretionary spending. The company’s loan portfolio grew 10% year over year to $202 billion, and its annualized card member loan and accrued amortization rate of 1.9% represents sequential growth. reject and is much lower than comparable stocks, demonstrating Amex’s asset quality. For context, Capital One has a net charge-off rate for credit cards of approximately 5.6%.

First of all, I bought Amex as an opportunity for long-term dividend growth, and the stock (and company) is doing exactly what I want. Management has done an excellent job of consistently growing the company in different political and economic climates and despite various setbacks, and I have no reason to believe this will change anytime soon. As a credit card issuer, Amex has a best-in-class customer base in terms of credit quality and an impressive product portfolio. As a closed-loop payment network, Amex earns swipe fees that should gradually increase over time with customer spending.

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