While Friday's downbeat jobs report knocked back the overall
, it especially pressured companies with a strong link to the
nation's employment situation.
) is one such company, and its shares slumped Friday just a few
sessions after reaching a multiyear high. The Rochester, N.Y.,
firm provides payroll processing, along with other services
related to human resources and benefits. It claims more than half
a million small to midsize businesses as customers.
Even with Friday's drop, Paychex is worth a look for investors
seeking a stock with a relatively high dividend yield, modest
growth potential and generally positive chart action. It pays a
quarterly dividend of 33 cents a share. That works out to an
annual yield of about 3.7%, sizable in today's environment.
But note that Paycheck joined the rush of dividend payers that
accelerated dividend payments at the end of 2012 in order to help
shareholders avoid higher taxes. So quarterly payouts that would
have come in February and May were delivered this past
The company hasn't displayed big growth lately, but its gains
have been steady and accelerating. EPS increased 2%, 5% and 8%
over the past three quarters, with 9% growth expected in the next
report. Paychex's three-year EPS Stability Factor is an
impressive 1, close to the calmest possible grade of 0.
In terms of chart action, Paychex shows a consolidation that
dates back to September and featured resistance around the 34
level. On Wednesday, the stock rose as high as 35.95, but it then
pulled back toward 34 in Friday's session.
One concern is a drop in the past two quarters in the number
of U.S. funds with a stake. Fidelity Contrafund sold its stake
recently, according to IBD data.