If your employer outsources payroll processing services,
there's a good chance eitherAutomatic Data Processing (
) orPaychex (
) handles them.
Roseland, N.J.-based Automatic Data Processing is the world's
biggest provider of payroll, human resource, benefits and other
outsourced business services. It serves some 620,000 customers in
more than 126 countries. ADP says over 80% of Fortune 500
companies use at least one of its services.
ADP, which has paid a dividend to shareholders every year
since 1974, makes the S&P 500 Dividend Aristocrats index.
Companies in the index have boosted dividends each of the past 25
consecutive years.Johnson & Johnson (
), featured in Tuesday's Income Investor column, is also a
ADP currently pays a quarterly dividend of 48 cents a share,
or $1.92 a year. Its annualized yield of about 2.5% is tracking
higher than the S&P 500's 2.03%.
Annual earnings have grown each year since 2010. The consensus
forecast calls for a 10% increase for the current fiscal year,
which ends in June, as well as the next. The company's profit
dipped a penny in 2010 as it got hurt by the 2008-09
Recent steady profit growth helps it earn a 1 for its
three-year Earnings Stability Factor on a scale of 0 to 99, in
which 0 represents the most stable. Analysts expect a 7% increase
in fiscal Q2 earnings when ADP reports results on Feb. 5 before
Smaller rival Paychex provides payroll, human resource and
employee benefits outsourcing services to about 570,000 small and
midsize companies. It pays out $1.40 a year, for a 3.3%
Paychex, which has lifted profits the past three years, also
gets a 1 for its three-year Earnings Stability Factor.
Both companies' fortunes are largely tied to the U.S. economy.
The U.S. accounts for about 80% of ADP's business.