Everyone's talking about Warren Buffett's latest trades and the fact that Berkshire Hathaway has been a net seller of stocks over the last two years to the tune of $134 billion in 2024 alone. What doesn't get the same hype is that he hasn't sold any of his American Express (AXP 2.30%) stock throughout this selling frenzy and that he's said he would never sell it so long as he's at the helm of the company.

Buffett loves underappreciated and undervalued stocks. American Express has a long history of creating excellent shareholder value, and investors should take a look at this longtime winner because there's still a long growth runway. Here are three reasons to add it to your buy list.

1. It's old, but it's getting younger

Buffett has joked about the average age of the companies he loves ("Berkshire is not big on newcomers"), and American Express helps skew that average to very long. It's been in business since 1850, which makes it one of the oldest American companies in existence. That's given it a long time to get its model right, and it has experience through pretty much every kind of circumstance imaginable.

However, it has changed with the times, giving it a combination of stability with modern technology. It had looked like it was going to start aging a few years ago, but it refreshed its image and products to appeal to a younger cohort, and it's as fresh as ever.

Management said that in the U.S., fee-based consumer premium credit cards are the fastest-growing category, and American Express has 25% of the market. The adoption of these cards by the millennial and Gen Z cohorts is growing at an even faster rate, and American Express is adding them at a faster rate than the overall industry. It sees plenty of room to grow within this category, and these younger consumers create long-term growth potential as they grow and spend with American Express.

2. It targets an affluent clientele

American Express has a predominantly affluent customer base who spends more than the average mass consumer. They also pay annual fees for the privilege of using an American Express card, and the company provides an attractive rewards program that makes those fees worthwhile to the company's millions of cardholders.

The fee-based model creates a reliable revenue stream that goes straight to the bottom line, and it also generates loyalty among American Express members. Card fee revenue increased 17% year over year in 2024 to $8.4 billion and accounted for almost 13% of total revenue. Total revenue increased 10% (currency neutral) in 2024 to $65.9 billion, and earnings per share (EPS) climbed 25% to $14.01. It expects revenue to increase about 9% in 2025 and EPS of between $15 and $15.50.

The sweet spot is travel and entertainment, which appeals to American Express clientele, in contrast to goods and services spending, and the company focuses its rewards in this area. American Express used to have an "exclusive" reputation, which, while good for marketing, eventually became a problem because it wasn't accepted at enough locations. It's still not accepted everywhere, but it now has 80% coverage globally and more than that in travel and entertainment.

3. It pays a growing dividend

One of the things Buffett loves about American Express is its dividend. When a company pays a dividend, it implies that it's committed to creating shareholder value. That's a commitment to itself, to focus on cash and the bottom line, which are essentially the reasons a company is in business.

In an annual letter, Buffett told investors about his "secret sauce" and gave American Express as an example. Combining stock growth and dividends, his American Express investment grew from 1.3 billion in 1995 to $44.8 billion today. That's letting the flower grow, as his analogy goes. After selling some Apple and Bank of America stock recently, American Express stock is Berkshire Hathaway's second-largest position, accounting for 15.2% of the equity portfolio.

American Express has paid a dividend since 1989, and it's grown 169% over the past 10 years. It only yields 1% at the current price because the stock has been on a roll, increasing 37% over the past year. American Express is an excellent candidate for a top-value stock that provides stability, passive income, and the opportunity for growth.