1 Top Dividend Stock to Buy With Double-Digit Dividend and Earnings Growth

Shares of American Express (NYSE: AXP) have pulled back significantly in recent weeks, sliding to around $300 from a 52-week high of over $387.

A drop like this can understandably make investors nervous -- particularly when broader financial sector weakness is also having a rough start to 2026. But it also raises an important question: Has the market's pessimism gone too far, or is the stock's premium valuation still too high to justify stepping in?

A closer look at the credit card and lender specialist's resilient core business, combined with its aggressive capital return strategy, suggests this may be a good buying opportunity.

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A massive buyback and double-digit earnings growth

American Express's recent business momentum has been impressive -- and what makes it especially compelling is that it just keeps going. The integrated payments company's 2026 guidance made it clear that this will likely be another big year for the company.

Management said in the company's fourth-quarter update earlier this year that it expects earnings per share to land between $17.30 and $17.90. The midpoint of this guidance range implies more than 14% year-over-year growth.

This outlook builds on 15% year-over-year earnings-per-share growth in 2025 (when adjusted for the impact of the 2024 sale of a subsidiary).

And the company's top-line momentum has been strong as well. In 2025, American Express generated $72.2 billion in total revenue, net of interest expense, a 10% year-over-year increase.

And management isn't just offering optimistic forecasts. They are generating significant excess capital and are aggressively returning it to shareholders.

In 2025, the company returned $7.6 billion to shareholders, $2.3 billion via dividends and $5.3 billion in share repurchases.

To top it off, the company also increased its quarterly dividend by 16% to $0.95 per share. This gives the stock a dividend yield of 1.3% -- not bad for a company with double-digit growth rates in both its earnings and its dividend.

Flexing pricing power with the premium consumer

The driver behind this reliable growth is the company's relentless focus on high-spending consumers.

This strategic focus was put in the spotlight late last year with a major refresh of the flagship Platinum Card. American Express boldly raised the card's annual fee from $695 to a hefty $895.

But to keep its affluent customer base engaged and willing to pay that premium, the company layered on a slew of new lifestyle and travel perks. The refreshed card now includes expanded dining credits through Resy, up to $300 annually for Lululemon purchases, increased luxury hotel credits, and even a $200 credit toward an Oura Ring.

While this was the company's highest-profile card refresh last year, it's just one of many. The company said in its fourth-quarter earnings call that it refreshed cards in close to a dozen countries last year. Not only does the company use refreshes to keep its members engaged, but it also uses them to grow its card fee revenue. The company's net card fees hit $10 billion in 2025, up 18% year over year.

Valuation and the investor takeaway

The company's financial momentum and key growth drivers arguably make a strong case for the stock -- especially now that shares are trading at a more attractive valuation than at the start of the year.

Trading at about $300 as of this writing, American Express trades at about 17 times the $17.60 midpoint of management's 2026 earnings guidance -- not a cheap valuation but not overly expensive, either.

There are risks, including an unexpected slowdown in luxury travel spending or a shift in the regulatory environment that materially impacts credit card companies or lenders.

However, given the company's double-digit earnings growth profile, its recent 16% dividend hike, and a multi-billion-dollar buyback program actively shrinking its share count, I believe the stock's current valuation is justified.

American Express is an advertising partner of Motley Fool Money. Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.