August 21, 2018

ADP Stock: 44 Years of Dividend Increases and Continuing


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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