Yahoo Finance Automatic Data Processing Inc's Dividend Analysis
Exploring the Sustainability and Growth Prospects of ADP's Dividends
Automatic Data Data Processing Inc (NASDAQ:ADP) recently announced a dividend of $1.4 per share, payable on 2024-07-01, with the ex-dividend date set for 2024-06-14. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using data from GuruFocus, let's delve into Automatic Data Processing Inc's dividend performance and assess its sustainability.
What Does Automatic Data Processing Inc Do?
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Automatic Data Processing Inc (NASDAQ:ADP) is a provider of payroll and human capital management solutions servicing the full scope of businesses from micro to global enterprises. Established in 1949, ADP serves over 1 million clients primarily in the United States. ADP's employer services segment offers payroll, human capital management solutions, human resources outsourcing, insurance, and retirement services. The smaller but faster-growing professional employer organization segment provides HR outsourcing solutions to small and midsize businesses through a co-employment model.
A Glimpse at Automatic Data Processing Inc's Dividend History
Automatic Data Processing Inc has maintained a consistent dividend payment record since 1975, distributing dividends quarterly. The company has increased its dividend annually since 1975, earning it the status of a dividend aristocratan honor given to companies that have increased their dividend each year for at least the past 49 years.
Breaking Down Automatic Data Processing Inc's Dividend Yield and Growth
As of today, Automatic Data Processing Inc currently has a 12-month trailing dividend yield of 2.17% and a 12-month forward dividend yield of 2.30%, indicating an expected increase in dividend payments over the next 12 months. Over the past three years, the annual dividend growth rate was 10.80%, which extended to 12.40% per year over five years, and an impressive 11.10% over the past decade. Based on these figures, the 5-year yield on cost of Automatic Data Processing Inc stock as of today is approximately 3.89%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. As of 2024-03-31, Automatic Data Processing Inc's dividend payout ratio is 0.59, suggesting that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. Automatic Data Processing Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Automatic Data Processing Inc's profitability 9 out of 10 as of 2024-03-31, suggesting good profitability prospects. The company has reported positive net income for each year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Automatic Data Processing Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and Automatic Data Processing Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Automatic Data Processing Inc's revenue has increased by approximately 8.70% per year on average, a rate that outperforms approximately 52.6% of global competitors. The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Automatic Data Processing Inc's earnings increased by approximately 11.60% per year on average, a rate that outperforms approximately 47.35% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 12.00%, which outperforms approximately 55.86% of global competitors.
Conclusion: A Promising Outlook for Dividend Investors
Automatic Data Processing Inc's robust dividend history, coupled with its strong payout ratio, profitability, and growth metrics, presents a promising outlook for dividend investors. The company's consistent performance and strategic positioning suggest that it is well-equipped to sustain and potentially increase its dividends in the future. For those looking to explore further, GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
