shares

https://adprun.net/s are only as healthy as a company’s underlying business. Look for dividend stocks that have delivered stable and growing earnings and revenue. This is another percentage figure representing a stock’s annual dividend amount divided by its current price per share. Dividend yield gives investors an idea of how much a stock pays in annual dividends relative to its price. This is a percentage figure which represents a stock’s annual dividend amount divided by its annual EPS. The payout ratio rises and falls as a company’s earnings and dividend rates change.

Is ADP a safe stock?

ADP maintains a target payout ratio of 55%-60% of annual earnings, so the payout is very safe with room to grow. The current annual dividend payout is $5.00 per share after the November 2022 increase. Based on the forecast for earnings-per-share management provided, the payout ratio for this year should be ~62%.

Having followed ADP stock for many years, it usually looks pricey. The single-stage dividend discount model takes into account several factors I have discussed thus far. Note that these guides on ADP’s stock valuation are at the time of this article update. In my opinion, there is little to no chance of the ADP dividend being reduced anytime in the foreseeable future. It is a good practice to look at a company’s use of cash.

Dividends

I am not receiving compensation for it and have no business relationship with any company whose stock is mentioned in this article. If we use $3.82 and the August 9th closing stock price of $109.66 we get a forward PE of 28.7. This is in line with ADP’s PE for the last few years. Company in the data processing and outsourced services sector. Founded more than 60 years ago, ADP has grown to the stage where it now generates almost $12.4B in revenue from its more than 650,000 clients in more than 110 countries.

Guru Fundamental Report for ADP – Nasdaq

Guru Fundamental Report for ADP.

Posted: Mon, 20 Mar 2023 16:06:00 GMT [source]

None of the information presented should be construed as an offer to sell or buy any particular security. Investors can review Automatic Data Processing Inc’s dividend history through its dividend yield and the growth rate of its dividend. Its average dividend yield over the past five years is 1.9%, and its compound annual dividend per share growth rate over the last five years is 12.4%. You can compare these percentages to current figures and against sector and industry peers. Dividend stocks make regular distributions of cash and shares of stock to their shareholders.

Competitive Advantages & Recession Performance

Its offerings include Adp Stock Analysis & Review Of The Adp Dividend, benefits administration, talent management, HR management, workforce management, insurance, retirement, and compliance services, as well as integrated HCM solutions. Analyzing Automatic Data Processing Inc’s dividend history is a good first step for assessing payment sustainability. However, researching dividends requires more than simply looking at the company’s dividend yield and growth. Other financial metrics play an important role for investment decisions, too. The company’s dividend history, dividend growth rate, and dividend safety have impressed me for a long time. It is an all-round solid dividend stock, paying a 2% yield and growing the dividend amount by 6.7% per year on average.

cash flow

The company beat on the top and bottom line with Non-GAAP EPS of $1.86 topping estimates by $0.07. Revenue of $4.2 billion, up 9.7% year-over-year, was above consensus by $40 million. ADP has raised the dividend for forty-eight consecutive years and has a robust share buyback program.

Earnings Transcripts

I like it when a company clearly communicates its objectives for dividend payments. Many companies choose not to do this, but ADP has delivered for us in this area. First of all, I have observed an excellent run of dividend increases over the past several years. There are some great aspects regarding ADP dividend growth.

  • Total revenue has increased from approximately $12.8 billion in 2018 to over $16 billion in 2022.
  • The company continued to perform relatively well in the 2020 economic downturn caused by the coronavirus pandemic.
  • The combination of earnings growth, dividends, and valuation expansion results in a total expected return of 11.1% per year through fiscal 2028.
  • In 2014, ADP spun off its human capital management business, which now trades as CDK Global .
  • As at June 30, 2017 it had ~$27.3B of client funds on deposit while as at June 30, 2016 it had ~$33.8B.

Since I require a discount in the share valuations of my investments, my ratings are generally very conservative. My valuation requirements, combined with the high quality companies that I often highlight mean many stocks I rate as a hold perform well over the long term. Readers should consider this when weighing my buy/hold/sell recommendations. Furthermore, the dividend payout ratio as a percentage of free cash flow? It typically runs even lower than as a percentage of accounting earnings. But first, let’s discuss business fundamentals provided by the company’s public financial reporting.

Multiplied by the number of times a year the company pays its dividend. Like every good dividend stock, ADP has an annual forward dividend rate per share. Because knowing your investments is smart money management. And I use Personal Capital to manage my entire financial picture FREE of charge. Because these are all important aspects of selecting the best dividend stocks. An experienced financial analyst selected the stocks above, but they may not be right for your portfolio.

  • Valuation refers to the process of determining the present value of Automatic Data Processing and all of its assets.
  • Upon cancelling a subscription there are no pro-rated refunds.
  • Largest provider of payroll outsourcing services in the world.
  • Interested in learning how AAII’s Dividend Investing can help you develop a successful strategy?