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Recently, the board of American Express Company (AXP - Analyst Report) authorized a new share buyback program for 150 million shares. The new program replaces the earlier 150 million share repurchase program, which had 70 million shares available for buyback.

Concurrently, American Express also declared a quarterly dividend of 20 cents per share, payable on May 10 to shareholders of record as of Apr 5.

The new repurchase authorization is in compliance with American Express’ capital distribution plans approved by the Federal Reserve earlier this month. The Federal Reserve approved the company’s capital plan for the next one year, giving consent to hike its dividend by 15% to 23 cents per share from the second quarter of 2013 and buyback shares worth $3.2 billion in the last three quarters of 2013 and another $1.0 billion in the first quarter of 2014.

American Express’ received the approval in its second attempt. The first capital plan was rejected in January as it was adversely impacting the company’s capital ratios.

In the initial plan, the company had proposed to repurchase up to $4.7 billion of stock in 2013. However, the Federal Reserve disapproved and authorized a lower share buyback as it was contracting American Express’ Tier 1 ratios to 4.97% – below the minimum requirement of 5% – in one of the quarters.

American Express currently carries a Zacks Rank #3 (Hold). Some companies worth considering in the financial sector are Euronet Worldwide Inc. (EEFT - Snapshot Report), SS&C Technologies Holdings, Inc. (SSNC - Snapshot Report) and Moody's Corp. (MCO - Analyst Report). All these companies carry a Zacks Rank #1 (Strong Buy).

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