A Dividend Growth Stock You Likely Haven’t Considered
With so much hype around soaring tech stocks, Automatic Data Processing Inc. (NASDAQ:ADP) is not a name that gets mentioned often in the financial media. In fact, it doesn’t even get as much attention as the “boring” consumer staples stocks, because the latter are known to be recession-proof and have actually been hot commodities during the COVID-19 pandemic.
Still, if you’re an income investor and don’t know about ADP
stock, now would be a good time to give it a serious look. Automatic Data
Processing recently boosted its payout to shareholders, which is quite an
impressive feat, given what’s been going on in the world over the past year.
On November 11, 2020, the company’s board of directors
declared a quarterly cash dividend of $0.93 per share, which marked a 2.2%
increase from Automatic Data Processing stock’s previous quarterly payout. The
increased dividend was paid on January 1, 2021 to shareholders of record as of
December 11, 2020.
Note that the announcement marked the company’s 46th
consecutive annual dividend hike.
What’s more impressive is that Automatic Data Processing
comes from an industry that’s not exactly known to be recession-proof: payroll
processing. When the economy is in the doldrums and companies are laying off
workers—like what was happening last April—you’d expect Automatic Data
Processing’s business to be seriously impacted.
But that was not the case. In the fourth quarter of the
company’s fiscal year 2020, which ended June 30, 2020, its revenue totaled $3.4
billion. The amount represented a three-percent decline year-over-year and a
two-percent decline on an organic constant-currency basis.
The company’s fourth-quarter adjusted earnings came in at
$1.14 per diluted share, which was unchanged from what it earned in the
year-ago period.
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