American Express Co. is increasing its quarterly dividend by 11 percent.
The financial services company said Monday that it will raise its dividend to 20 cents a share from 18 cents. It is payable May 10 to shareholders of record as of April 5.
It's the company's first dividend increase since November 2007.
The American Express board also authorized buying back as many as 150 million shares of company stock from time to time. The company said this month that it plans to return capital to shareholders through repurchases of up to $4 billion this year and up to $1 billion in the first quarter of 2013, and by raising the dividend.
American Express shares rose $1.41, or 2.5 percent, to end at $58.66 Monday. At that closing price, 150 million shares would be worth about $8.8 billion.
The actual number of shares that are repurchased will be based on the company's business plans and financial performance, and on market conditions, New York-based American Express said in a news release.
American Express was one of 15 major U.S. banks that passed so-called stress tests earlier this month and got a green light from the Federal Reserve to boost their dividends and take other steps such as buying back some of their shares.
The central bank's findings signaled its confidence that the financial system, which nearly collapsed 3 1/2 years ago, is healthy. The Fed reviewed the balance sheets of 19 bank holding companies to determine whether they could withstand a severe crisis: unemployment at 13 percent, stock prices falling 60 percent over two years and home prices plunging 21 percent from today's levels. Only four failed the test.
The Fed announced the results on March 13, and many of the banks that passed quickly announced plans to raise dividends.