ADP Offers Steady Capital Gains, Dividend Hikes
Automatic Data Processing ( ADP ) has offered steady capital gains and dividend increases in recent years, rewarding long-term investors who hung on through the 2008-09 recession.
The world's biggest provider of payroll and data processing services is up 20% this year, topping the S&P 500. It's risen 23% over the past year and has more than doubled from a low of 30.83 in October 2008.
Meanwhile, the Roseland, N.J.-based company has boosted its quarterly dividend every year since 2003, a nearly fourfold increase from 12 cents a share to 44 cents a share. That equates to an annual dividend of $1.76 a share, which yields 2.5% annually at the current share price. That's about the same as the S&P 500 average.
ADP's profit and sales growth has been slow but steady. The company's three-year earnings stability factory is 1 on a scale of 0 to 99, with 0 being most stable.
Profit for the fiscal year is seen rising 7% to $2.91 a share, in line with ADP's three-year average. Earnings are expected to rise 9% in 2014. Sales growth has averaged 9% over the past three years.
ADP's fortunes are hitched to the U.S. economy, where it earns about 80% of its revenue. Europe and Canada account for most of the rest.
ADP has been riding its 10-week line higher this year. It reached a record high of 72 on May 17 before pulling back to its key support line in quiet volume. It's now 5% off its high and is showing the elements of a flat base.
Institutional investors are also supporting the stock, whose Accumulation-Distribution Rating of B is greater than the neutral C.
Meanwhile, its Composite Rating is a respectable 85 and its Relative Price Strength Rating is 72.