Jobs News Puts Paychex Back Near Previous Resistance


While Friday's downbeat jobs report knocked back the overall stock market , it especially pressured companies with a strong link to the nation's employment situation.

Paychex ( PAYX ) 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 December.

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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Personal Finance , Investing Ideas

Referenced Stocks: PAYX

Investor's Business Daily

Investor's Business Daily

More from Investor's Business Daily:

Related Videos



Most Active by Volume

  • $17.67 ▼ 1.28%
  • $11.37 ▼ 7.49%
  • $3.84 ▼ 1.03%
  • $34.32 ▲ 0.09%
  • $3.10 ▼ 9.88%
  • $14.55 ▲ 1.11%
  • $122.77 ▼ 1.39%
  • $28.35 ▲ 1.03%
As of 7/27/2015, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by