Automatic Data Processing Is a Top Dividend Stock
In today’s market, few companies are more
shareholder-friendly than Automatic Data Processing(NASDAQ:ADP).
What do I mean by “shareholder-friendly?” Well, here’s an
example: when a company comes across unexpected gains, will management use the
money to pay themselves big bonuses, or will they return the excess cash to
shareholders?
At ADP, management always chooses to do the latter. When the
company benefited from the Tax Cuts and Jobs Act, management decided to
return a portion of the benefits to investors through a 10% dividend increase.
(Source: “ADP Increases Cash Dividend,” Automatic Data Processing,
April 11, 2018.)
What’s particularly impressive is that ADP had already
raised its payout less than six months before this one.
Of course, the company could pay out all the benefits in a
special one-time payment. But as an income investor with a long-term horizon, I
actually prefer an increase to the regular dividend rate.
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