Prediction: This stock will be Warren Buffett’s top performer through 2030

Everyone knows about Warren Buffett’s monster Apple (NASDAQ:AAPL) investment. The hundred-billion-dollar earning giant — which Buffett recently cut — is repeatedly cited as one of Berkshire Hathawayhis best investments. However, the investment has been held for less than 10 years, while Buffett has been investing for over 60 years.

Buffett bought and owned American Express (AXP 1.85%) for many years more than Apple. And yet few people discuss this huge winning investment. Even though the stock has risen more than tenfold since Buffett’s original purchase, the stock still looks cheap today. Here’s why American Express is poised to crush the market again and may be Buffett’s best player through 2030.

American Express: One of Buffett’s favorite brands

American Express operates one of the only credit card networks in the world. However, unlike other networks such as Visa and MasterCardAmerican Express acts as a bank and actually issues its own credit cards. This vertically integrates digital payments, making American Express a unique business in the credit card world.

For a more affluent clientele, the company has built a premium brand that has been perfected for decades. They offer high-fee credit cards, such as the American Express Platinum Card, which has an annual fee of $695 per year. People are willing to pay these fees for the great travel benefits, cash back offers and other perks of the American Express ecosystem. As a classic network effect, it would be virtually impossible to uproot and replace American Express from the payments ecosystem, making it a broad business.

Buffett loves top brands like American Express, Apple and Coca cola. It’s no surprise to see that Berkshire Hathaway still owns more than 20% of the business. It made its first investment in 1991. Since then, American Express has seen a total return of nearly 8,000%, which is better than Coca-Cola over the same time frame.

Increasing card members, expanding international acceptance

About 10 years ago, American Express went through a rough patch. It struggled to win new users and lost a huge contract for Costco Wholesale credit card partnership.

Since then, with new management at the helm, the company has put itself back on the right shelf. Cardmembership totals are growing again and have been for several years. Last quarter, the company added 3.3 million new cards, accelerating from a gain of 3 million in the same quarter a year ago. New cards are the lifeblood of American Express’ business, so it’s great to see new customers joining the platform. For decades to come, these customers should provide a lot of value to the American Express business as these wealthy customers make purchases with these cards and pay high annual fees.

To maintain this growth, American Express is investing aggressively to increase the number of places that accept American Express card payments. This is the other blood of the payments business. If a merchant doesn’t accept your credit card as a form of payment, you don’t make money because shoppers can’t use their cards to make the purchase. Since 2017, the company has quadrupled its international acceptance locations, which will lead to even greater payout growth in the coming years. It has virtual parity of acceptance with Visa and Mastercard in the United States today.

AXP PE Report Data by YCharts

Buy this ultimate dividend producer and never sell

Through an increase in card fees, payment volume, international acceptance and more credit card loans, American Express believes it can increase its revenue by 10% annually over the long term. Management believes that earnings per share (EPS) can grow even faster.

That increase — if management agrees — will give American Express plenty of room to increase its dividend payout. The stock currently has a dividend yield of 1.23%, which seems pretty low. But the stock isn’t wildly expensive, trading at a below-market price-to-earnings (P/E) ratio of 17. Over the past 10 years, American Express’s dividend per share has grown 165%.

If revenue and earnings continue to grow 10% or more, I think the stock can double its dividend per share again by 2030. Combined with a low initial valuation, I think American Express may be the best performing stock of Buffett’s from now until now. 2030.